) hit a 52-week high on Jan 23, shortly after this provider of
consumer fitness products announced strong preliminary results for
the fourth quarter of 2012. Nautilus outperformed the Zacks
Consensus Estimate in the last three quarters with an average
surprise of 200%. The Zacks Rank #1 (Strong Buy) stock also
returned investors a handsome 170.3% over the last 52 weeks.
Promising Fourth Quarter Prelim Results
On Jan 16, 2013, Nautilus announced preliminary fourth-quarter net
sales of approximately $65.0 million, up 8.4% year over year. As a
result, earnings per share are expected between 21 cents and 23
cents, versus 11 cents a year ago.
For the full-year 2012, preliminary net sales grew 7.5% to $194.0
million, while earnings per share are anticipated between 32 cents
and 34 cents, substantially up from 8 cents in the prior year.
Solid Third Quarter Beat
Nautilus' third-quarter adjusted earnings of 4 cents per share
breezed past the Zacks Consensus Estimate by 500.0% and the
year-ago results by 300.0%. The company's net sales inched up 1.7%
to $38.1 million. In particular, the Direct segment experienced
solid revenue growth of 10.9%, thanks to increased demand for
Nautilus's cardio products.
Gross margin in the quarter improved 650 basis points to 48.7%,
buoyed by sales of higher margin Direct Channel products. Operating
margin also improved 370 basis points to 1.8%, driven by efficient
management of overheads.
Earnings Estimates Moving Up
The Zacks Consensus Estimate for 2012 has gained approximately
18.0% in the past 60 days to 33 cents, representing a
year-over-year increase of 312.5%. Meanwhile, the Zacks Consensus
Estimate for 2013 moved up 10.5% to 42 cents, indicating a
year-over-year improvement of 26.3%.
Valuation Stretched, Yet Lucrative
Though the stock of Nautilus is expensive by some valuation metrics
like price to book value (P/B) and price to sales (P/S) compared to
its peers, it looks attractive on a price/earnings (P/E) ratio and
return on equity (ROE) basis.
The stock's P/B basis is at 4.55x and its P/S is at 0.86x. Both
figures are at a premium to the peer group averages. Given the
company's compelling fundamentals, the premium valuation is
However, Nautilus currently trades at a forward P/E ratio of
12.65x, in line with the peer group average. Moreover, it has a
trailing 12-month ROE of 19.5%, which is significantly above the
peer group average of (0.4%), suggesting efficient reinvestment of
earnings compared to its peer group.
Shares of Nautilus have been rising since late-October 2012 and
reached a new 52-week high of $5.43 on Jan 23, 2013. The stock is
currently trading above its 50- and 200-day moving averages, which
stand at $3.68 and $3.03, respectively.
Volume averages roughly 224K daily. The 52-week return for the
stock is 170.26%, significantly ahead of the 13.5% return by the
S&P 500 index.
With a brand portfolio that includes Nautilus, Bowflex,
SchwinnFitness, StairMaster and Trimline, Nautilus manufactures and
markets a complete line of health and fitness products through
direct, commercial and retail channels primarily in the United
States and Canada. The company is headquartered in Vancouver and
The market cap of the company is $161.3 million. Another stock from
the same sector expected to perform strongly includes HSN Inc. (
). Some other stocks from leisure and recreational products with a
short-term bullish outlook are Sturm, Ruger & Co. Inc. (
) and Smith & Wesson Holding Corporation (
). All three companies carry a Zacks Rank #1 (Strong Buy).
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NAUTILUS INC (NLS): Free Stock Analysis Report
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