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Wedbush Rated Columbia Sportswear as ‘Outperform’

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Nov. 4 2016, Updated 9:04 a.m. ET

Price movement

Columbia Sportswear (COLM) has a market cap of $4.0 billion. It rose 1.7% to close at $56.93 per share on November 2, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -1.1%, -0.14%, and 17.8%, respectively, on the same day. COLM is trading 2.9% below its 20-day moving average, 0.32% below its 50-day moving average, and 0.05% below its 200-day moving average.

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Related ETF and peers

The Guggenheim Mid-Cap Core ETF (CZA) invests 0.47% of its holdings in Columbia Sportswear. The ETF tracks the Zacks Mid-Cap Core Index, a proprietary selected portfolio of 100 mid-cap stocks that seek to outperform pure market-cap indexes. The YTD price movement of CZA was 7.3% on November 2.

The market caps of Columbia Sportswear’s competitors are as follows:

  • Nike (NKE): $81.3 billion
  • Under Armour (UA): $12.9 billion
  • Skechers USA (SKX): $3.2 billion

COLM’s rating

On November 2, 2016, Wedbush initiated the coverage of Columbia Sportswear Company with an “outperform” rating and also set the stock’s price target at $67.0 per share.

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Performance of Columbia Sportswear in 3Q16

Columbia Sportswear reported 3Q16 net sales of $745.7 million, a fall of 2.9% from net sales of $767.6 million in 3Q15. Sales of the Columbia and Mountain Hardwear brands fell 3.7% and 12.4%, respectively, and sales of SOREL and prAna rose 1.6% and 10.8%, respectively, between 3Q15 and 3Q16. The company’s operating margin narrowed by 60 basis points.

Its net income and EPS (earnings per share) fell to $83.6 million and $1.18, respectively, in 3Q16, compared with $91.1 million and $1.28, respectively, in 3Q15. COLM’s cash and cash equivalents and inventories rose 26.4% and 7.6%, respectively, between 3Q15 and 3Q16. Its current ratio rose to 4.0x, and its debt-to-equity ratio fell to 0.26x in 3Q16 compared with 3.5x and 0.32x, respectively, in 3Q15.

COLM declares dividend

Columbia Sportswear has declared a regular quarterly dividend of $0.18 per share on its common stock. The dividend will be paid on December 1, 2016, to shareholders of record on November 17, 2016.

Projections

The company has made the following projections for fiscal 2016:

  • net sales growth of ~4%, which factors in the negative effect of less than 1% from changes in foreign currency exchange rates
  • operating income in the range of $250 million to $259 million
  • EPS in the range of ~$2.55 to $2.65, which factors in the unfavorable impact of -$0.26 from the strong US dollar
  • a tax rate of ~25%

In the next article, we’ll look at Foot Locker (FL).

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