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Quiksilver Inc. Message Board

  • pp_burns pp_burns Jul 5, 2012 2:16 AM Flag

    Is ZQK a falling knife?

    Thinking of getting in around $2.25-$2.30. I see the DC logo everywhere I look, and with hotter weather, I think warm-weather clothing sales could really pick up this Summer.

    Indicators are showing the stock as really oversold- Low P/E, low price to book... But this thing has been dropping like a rock since March. What am I missing? How much further can it go?

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    • ZQK reported Q2 earnings that modestly missed expectations, largely due to lower gross margins and Euro currency weakness (most of the company’s profits derive from Europe), however European sales were decent considering the challenges there. Gross margins are not permanently depressed but were impacted by inventory clearance activity. Our thesis remains the same – ZQK has strong, growing brands with global appeal but is poorly managed.
      A new internally appointed COO, new CFO and newly implemented systems are the first steps needed to address the margin improvement opportunity. Either management will succeed, and the stock will move higher, or if they don’t, the company will be sold to someone who can execute. ZQK trades at about 6x EBITDA. I ike the corporate bonds as well with a 9% YTM.