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Bull of the Day: Columbia Sportwear (COLM)

·2 min read

Based on Portland, OR, Columbia Sportswear COLM is a specialty retailer that focuses on outdoor and active lifestyle apparel, footwear, accessories, and equipment throughout the U.S. and internationally. Columbia offers products under four well-established brands: Columbia, SOREL, Mountain Hardwear and prAna.

Q4 Earnings Impress Wall Street

Revenue spiked 23% to a record $1.13 billion compared to Q4 2020, while operating income increased 71% to $211.6 million, or 18.7% of total sales, another record. Columbia’s strong sales growth can be attributed to high consumer demand, which helped fuel direct-to-consumer growth (up 33% year-over-year) and larger-than-expected Fall 2021 wholesale shipments.

Net sales for COLM’s U.S. business grew 27%, and the company’s international markets experienced favorable recovery trends in most regions.

Looking at brand performance, SOREL revenue moved 9% higher in Q4 and Mountain Hardwear’s sales jumped 30% thanks to successful new product launches.

Columbia also said that it ended the quarter with $894.5 million in cash and short-term investments, with no borrowings; it also approved a 15% increase to its dividend, which now yields 1.1% on an annual basis.

Can COLM Take Off?

Columbia Sportswear Company Price and EPS Surprise
Columbia Sportswear Company Price and EPS Surprise

In the past one year, shares of Columbia are down about 10% compared to the S&P 500’s 15% gain. But earnings estimates have been rising, and COLM is a Zacks Rank #1 (Strong Buy) right now.

For fiscal 2022, four analysts revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has jumped $0.43 to $5.76 per share. Earnings are expected to grow about 8% compared to 2021, and sales could see growth of almost 18% to $3.7 billion for the year.

Columbia has proved that it is well-positioned in the current market environment, and CEO Tim Boyle is confident about the strategies the company has in place to drive profitable growth. For 2022, Columbia forecasts full-year sales growth of 16% to 18% on top of the record growth it generated last year.

Even though inflation and supply chain issues persist, management has implemented a mid-single-digit percent price hike for its Spring 2022 collection, as well as a high single to low double-digit percent hike for its Fall 2022 product. Columbia has also been investing to enhance its supply chain capabilities.

All of these factors, plus COLM’s enticing 16.3X 12-month price-to-earnings ratio, could mean the stock is ripe for a rebound.If you’re an investor searching for a retail stock to add to your portfolio, make sure to keep COLM on your shortlist.

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