Know of a hot consumer brand? Odds are good that it might be
Iconix Brand Group, Inc.
). The company continues to expand its brand empire, having just
added the rest of Ecko and Marc Ecko Cut & Sew under its
banner. Earnings on this Zacks Rank #1 (Strong Buy) are expected to
jump by the double digits this year.
You might not know of Iconix but you know its brands. In addition
to Ecko, it owns Candies, Bongo, Badgley Mischka, Joe Boxer,
Rampage, Mudd, London Fog, Danskin, Royal Velvet, Fieldcrest,
Charisma, Starter, Waverly, Umbro, Lee Cooper, Ed Hardy, and
It also owns an interest in Artful Dodger, Material Girl, Peanuts,
Truth or Dare, Billionaire Boys Club, Ice Cream, Modern Amusement
and Buffalo. It licenses out the brands to retailers so it doesn't
actually manufacture anything. The company holds no inventory which
puts it in a unique position in the world of retail.
On May 24, it acquired the remaining 49% interest in IP Holdings
Unlimited, the owner of men's brands Ecko Unltd and Marc Ecko Cut
& Sew, including trademarks for $45 million. It was already the
core apparel licensee for the brands. It is sold in 5,000 stores in
60 countries and has about 100 stand-alone retail stores.
Record Revenue in the First Quarter of 2013
On Apr 24, Iconix reported first quarter 2013 results and beat the
Zacks Consensus by 5.8%. It was the fourth consecutive earnings
Revenue jumped 19% to a record $105.1 million as the company said
it was off to a strong start to the year. It had completed 3
acquisitions in the prior five months which boosted the quarter.
Iconix raised its full year EPS guidance to a range of $2.10 to
$2.20 from $2.05 to $2.15. It expects over 20% revenue and EPS
growth for the full year.
The analysts are equally as bullish. They expect earnings to jump
27.7% in 2013 and another 9% in 2014. The Zacks Consensus is
looking for the higher end of the company's guidance range. It's
calling for $2.17.
Valuations Still Attractive
In addition to double digit earnings and revenue growth, an
investor is also getting value. Iconix trades with a forward P/E of
just 13.9. That's under the average of the S&P 500 which is
It also has a price-to-book ratio of just 1.5. A P/B ratio under
3.0 usually means there is value.
Shares at 5-Year High
With stocks near all-time highs, it's not surprising to see that
shares of Iconix are also at multi-year highs.
The earnings beat combined with the boost to guidance has pushed
the stock higher in 2013.
But with strong growth expected to continue through the end of this
year, an investor has the rare opportunity to buy a value stock
with double digit growth. This is a Zacks Bull of the Day worth
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Tracey Ryniec is the Value Stock Strategist for Zacks.com. She
is also the Editor of the
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ICONIX BRAND GP (ICON): Free Stock Analysis
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