U.S. Markets close in 4 hrs 28 mins

Bull of the Day: Columbia (COLM)

Tracey Ryniec

Columbia Sportswear Company (COLM) is cashing in on the athleisure and active wear bonanza. This Zacks Rank #1 (Strong Buy) had a record 2018 with more earnings growth to come in 2019.

Columbia Sportswear is a specialty retailer in apparel, footwear, accessories and equipment. Its brands are sold in 90 countries through its own stores and web sites.

It isn't just the Columbia brand, however, as it also owns Mountain Hardwear, SOREL and prAna.

Big Beat in the Fourth Quarter

On Feb 7, Columbia reported its fourth quarter 2018 results and blew by the Zacks Consensus Estimate. It reported earnings of $1.68 versus the consensus of $1.27, a beat of 41 cents.

It has a fantastic earnings surprise track record. It hasn't missed since Zacks data began in 2015.



In the fourth quarter, sales rose 18% to a record $917.6 million as the major brands and geographic locations gave the quarter a boost.

It's largest brand, Columbia, saw sales rise 21% to $727.8 million.

SOREL jumped 11% to $126.9 million.

PrAna rose 21% to $36.7 million.

Only Mountain Headwear saw a decline, losing 8% to $26.1 million but it was the smallest brand, by revenue, in the quarter.

Another Record Year Expected in 2019?

Columbia guided to full year 2019 sales of $2.97 to $3.03 billion, up from its 2018 sales of $2.8 billion. That's 6% to 8% sales growth.

2018 was a record year for sales, so if it meets the guidance, 2019 will be another record year.

Earnings guidance was projected between $4.30 and $4.45.

The company gave a lot of disclaimers on the guidance, however, as it has said in the past that it would be hit hard if the Trump Administration put on 25% tariffs in the trade dispute with China.

Analyst Estimates Pop

Given the bullish guidance and strong 2018, it's not surprising that the analysts are bullish on 2019 as well.

7 estimates were revised higher for 2019 in the last 60 days, pushing the Zacks Consensus Estimate up to $4.34 from $4.07. That's earnings growth of 8.2%.

2 estimates were also revised for 2020 in the last 2 months, with the Zacks Consensus jumping to $4.87 from $4.54. That's another 12.4% earnings growth.

Increased the Share Buyback Program

In 2018, Columbia bought back $201.6 million worth of shares under its existing share buyback program. There remains $130 million under that plan.

In February 2019, the board authorized an additional $200 million to the plan.

The company also pays a dividend, which is currently yielding 0.9%.

Shares Soar on the News

Shares jumped to new 5-year highs on the earnings report and are up 147% during that time period.



Year-to-date, they've added another 22.6%.

They're no longer as cheap as they were as they sport a forward P/E of 23.7.

But they are one of the faster growing specialty retailers. They are in the same growth league with competitors such as Deckers (DECK), Lululemon (LULU) and Canada Goose (GOOS).

For investors looking for an international apparel and footwear retailer in the hot athleisure and activewear categories, Columbia should be on your short list.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.

This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.

See their latest picks free >>
 


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
lululemon athletica inc. (LULU) : Free Stock Analysis Report
 
Canada Goose Holdings Inc. (GOOS) : Free Stock Analysis Report
 
Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report
 
Columbia Sportswear Company (COLM) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research