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Imperial Capital: Escalade Consolidates In Table Tennis, Archery

John Seward

Escalade, Inc. (NASDAQ: ESCA) sales next year will grow 9 percent with its market-leading products in table tennis and archery, an analyst said Tuesday.

Escalade recently dumped its printing and security businesses, which had generated a quarter of its revenue.

The company is the world's largest producer of table tennis equipment and is also a significant player in archery, with its leading Bear brand of equipment.

Dicks Sporting Goods Inc (NYSE: DKS) and privately held Sports Authority Inc. together accounted for 24 percent of Escalade's 2013 sales.

While archery and table tennis are slow growth categories, Imperial Capital's John O'Neil said Escalade has a history of gaining market share through innovation and about 20 small acquisitions in the past couple of decades.

O'Neil launched coverage on the company with a Buy rating and $22 target.

Escalade changed hands recently at $14.12, up 1.4 percent. With a market capitalization of $191 million, Escalade is thinly traded, posting average daily volume of about 21,000 shares.

Declining participation in pass-times like table tennis, billiards and darts has spurred industry consolidation which has benefited Escalade, according to O'Neil.

Growth estimates for archery weren't offered by O'Neil, although he cited figures from another trade group suggesting that 8 percent of the U.S. population participates.

O'Neil speculated that the popularity of a recent film series, "Hunger Games," may boost sector sales.

Escalade, which doesn't offer quarterly conferences with analysts, is about 35 percent held by insiders, including its Chairman Robert E. Griffin, who owned a 16.5 percent stake as of the company's March proxy statement.

O'Neil thinks Escalade's 2015 sales will grow 9 percent, including 2 percent "organic" growth, with the remainder from its recent acquisition of billiard accessory maker Cue & Case.

For 2016, O'Neil sees organic sales growth of 4 percent and a widening profit margin.

Sales in 2013, which included Escalade's printing and security units totaled $163.7 million.

Latest Ratings for ESCA

Date

Firm

Action

From

To

Dec 2014

Imperial Capital

Initiates Coverage on

Outperform

Dec 2014

Imperial Capital

Initiates Coverage on

Outperform

Sep 2014

Wunderlich

Initiates Coverage on

Buy

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