CL King Downgrades Vista Outdoor to ‘Neutral’

Price movement

Vista Outdoor (VSTO) has a market cap of $1.7 billion. It fell 3.0% to close at $28.70 per share on January 13, 2017. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -24.6%, -25.4%, and -22.2%, respectively, on the same day.

VSTO is trading 23.4% below its 20-day moving average, 25.5% below its 50-day moving average, and 34.1% below its 200-day moving average.

CL King Downgrades Vista Outdoor to ‘Neutral’

Related ETF and peers

The First Trust Consumer Discretionary AlphaDex ETF (FXD) invests 1.1% of its holdings in Vista Outdoor. The YTD price movement of FXD was 0.08% on January 13.

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

  • Sturm, Ruger & Co. (RGR) — $973.1 million
  • Orbital ATK (OA) — $5.2 billion

VSTO’s rating

On January 13, 2017, CL King downgraded Vista Outdoor’s rating to a “neutral” from a “buy.” On January 12, 2017, ROTH Capital also downgraded Vista Outdoor’s rating to a “neutral” from a “buy.”

Latest news on VSTO

VSTO has appointed Dave Allen as president of its Outdoor Products segment, including hunting and shooting accessories, outdoor recreation, and sports protection.

The company reported, “As segment president, Allen will have responsibility for segment-level financial performance, strategic planning, innovation and new products, brand management and marketing, product line management, sourcing and supply chain management, capital expenditures and R&D investment and returns, and talent management.”

Jason Vanderbrink has been appointed as senior vice president of the company’s Sales segment. According to VSTO, “He is responsible for leading Vista Outdoor’s portfolio of domestic, international, law enforcement and government sales, and trade marketing operations.”

Vista Outdoor’s performance 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 over 2Q16.

VSTO’s 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% over fiscal 2Q16.

VSTO’s cash and cash equivalents fell 68.2%, and its net inventories rose 30.8% between fiscal 2Q17 and fiscal 4Q16.

Projections

Vista Outdoor has made the following projections for fiscal 2017:

  • sales of $2.7 billion–$2.8 billion
  • adjusted EPS of $2.65–$2.85
  • free cash flow of $130 million–$160 million

This guidance doesn’t include the effects 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.

Now let’s take a look at Sony Corporation (SNE).