A Look at Vista Outdoor’s Fiscal 2Q17 Performance

Price movement

Vista Outdoor (VSTO) fell 2.9% to close at $37.87 per share during the second week of November 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -2.9%, 1.8%, and -14.9%, respectively, on the same day.

VSTO is trading 1.6% below its 20-day moving average, 2.3% below its 50-day moving average, and 17.3% below its 200-day moving average.

A Look at Vista Outdoor’s Fiscal 2Q17 Performance

Related ETF and peers

The First Trust Consumer Discretionary AlphaDex ETF (FXD) invests 1.1% of its holdings in Vista Outdoor. The ETF tracks an index of large- and mid-cap US Consumer Discretionary stocks. The underlying index uses multifactor selection and tiered equal weighting. The YTD price movement of FXD was 2.6% on November 11.

The market caps of Vista Outdoor’s competitors are as follows:

  • Sturm, Ruger & Co. (RGR) — $894.0 million
  • Smith & Wesson (SWHC) — $1.2 billion
  • Orbital ATK (OA) — $4.8 billion

Performance of Vista Outdoor in fiscal 2Q17

Vista Outdoor reported fiscal 2Q17 net sales of $684.3 million, a rise of 24.1% compared to its net sales of $551.4 million in fiscal 2Q16. The company’s gross profit margin and EBIT (earnings before interest and tax) margin expanded 10 basis points and 430 basis points, respectively, in fiscal 2Q17 compared to the prior year’s period.

Its net income and EPS (earnings per share) rose to $73.2 million and $1.22, respectively, in fiscal 2Q17, compared to $32.7 million and $0.52, respectively, in fiscal 2Q16. It reported adjusted EPS of $0.74 in fiscal 2Q17, a rise of 17.5% compared to fiscal 2Q16.

VSTO’s cash and cash equivalents fell 68.2%, and its net inventories rose 30.8% in fiscal 2Q17 compared to fiscal 4Q16. Its current ratio fell to 2.1x, and its debt-to-equity ratio rose to 1.1x in fiscal 2Q17, compared to its current and debt-to-equity ratios of 2.8x and 0.77x, respectively, in fiscal 4Q16.

Projections

Vista Outdoor has made the following projections for fiscal 2017:

  • sales of $2.7 billion–$2.8 billion
  • interest expenses of ~$45 million
  • tax rate of ~37%
  • adjusted EPS of $2.65–$2.85
  • capital expenditure of ~$90 million
  • free cash flow of $130 million–$160 million

This guidance doesn’t include the impact of future strategic acquisitions, divestitures, investments, business combinations or other transactions, contingent consideration revaluations, transition expenses, or inventory step-ups for completed acquisitions, but it does include the company’s acquisition of Camp Chef.

Next, we’ll discuss Lear Corporation (LEA).