Black Diamond, Inc.
) has delivered three straight positive earnings surprises,
including a 140% beat in the most recent quarter. The company is
expected to report a narrower loss than last year in its second
quarter earnings release on August 8. Shares of this Zacks #1 Rank
(Strong Buy) outdoor equipment maker should continue to show
momentum with the help of its steady results and the strategic
acquisition of POC Sweden.
Acquisitions and Earnings
Black Diamond completed the acquisition of sports gear maker POC
Sweden AB on July 2. The acquisition is a strategic fit for the
company as POC is a fast-growing brand globally with healthy
margins and 35% growth in the prior fiscal year. The acquisition is
expected to be accretive to the company's bottom line in 2013. The
deal is also consistent with the company's strategy of expanding
through acquisitions. Management expects to generate $500 million
in sales by 2015, with $250 million coming from acquisitions.
On May 7, Black Diamond reported first quarter 2012 earnings of 12
cents per share, beating the Zacks Consensus Estimate and the
year-ago quarter earnings by 140%. Total revenue climbed 19% year
over year to $46.4 million and was also above the Zacks Consensus
Estimate of $44.0 million. The double-digit top-line growth was
driven by both innovative and existing products.
Gross margin expanded 150 basis points (bps) year over year to
40.1%, benefiting from the shift to higher-margin products. Total
operating expense jumped 6% to $13.9 million during the quarter due
to continued investments in infrastructure improvements and the
upcoming apparel line in 2013. Despite higher expense, operating
margin enhanced 320 bps to 10.2%.
For fiscal 2012, the company expects sales pre-POC to range between
$160 million and $165 million, indicating 10% to 13% growth.
Earnings Estimates on the Rise
The Zacks Consensus Estimate for 2012 has risen by 67% to 10 cents
per share over the last 90 days. For 2013, the Zacks Consensus
Estimate climbed 23% to 16 cents per share over the same timeframe.
The estimate for 2013 represents a year-over-year increase of
Though the stock of Black Diamond is expensive on a P/E basis, it
looks reasonable from a book value perspective. On a trailing
twelve months P/E basis, shares are trading at a P/E of 33.58x,
versus the industry average of 13.28x. On a price-to-book basis,
shares currently trade at 1.34x, a 47% discount to the industry
average of 2.53x. The company's long-term EPS growth projection of
17.5% is also higher than the industry average of 14.0%.
Since mid-January, Black Diamond stock remained above its 200 day
moving average, which currently stands at $8.64 against the current
unit price of $10.41. Moreover, since June 29, the stock is trading
above its 50-day moving average. On the performance front, Black
Diamond has outperformed the S&P 500 year-to-date and has
delivered a return of 39.4% during the period, versus just 9.5% for
the benchmark. Black Diamond is currently trading around its
52-week high of $10.63.
Located in Salt Lake City, Utah, Black Diamond manufactures outdoor
products for climbing, mountaineering, backpacking, skiing and
other year-round activities. The company owns the Black Diamond and
Gregory brands and remains committed to growth through acquisitions
in the long term. With a market capitalization of $319.4 million,
Black Diamond primarily competes with Pool Corp. (
) and Columbia Sportswear Company (
BLACK DIAMOND (BDE): Free Stock Analysis Report
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