) shares have soared nearly 115.4% since October 2011. This
mall-based, action-sports specialty retailer has an impressive
history of positive earnings surprises and monthly comparable store
sales gains. In fact, it has been beating the Zacks Consensus
Estimate for EPS since the fourth quarter of fiscal 2008. Due to
rising earnings estimates, Zumiez became a Zacks #1 Rank (Strong
Buy) on July 18, 2012.
In addition, the company's recently completed acquisition of Blue
Tomato, a leading European action sports retail company, gives it
further strength. The acquisition should provide Zumiez with
broader avenues to strengthen its international base, while being
accretive to its second quarter earnings.
Fabulous First Quarter
On May 17, Zumiez reported fiscal first-quarter 2012 earnings of 15
cents per share, which beat the Zacks Consensus Estimate by 36.4%
and surged 150.0% from the prior-period level. This performance was
attributed to improved margins, strong merchandise, store expansion
and e-commerce strategies.
Net sales climbed 22.7% to $129.9 million from $105.9 million a
year ago. Comparable store sales were up 12.9% compared with an
increase of 12.6% in the year-ago quarter.
Cost of goods sold in the quarter increased 20.8% year over year to
$87.8 million. Selling, general and administrative expenses totaled
$34.8 million, up 13.7% year over year. However, as a percentage of
net sales, SG&A expenses contracted 210 basis points (bps) to
26.8%. Consequently, operating income shot up 180.8% to $7.3
million from the year-ago operating income of $2.6 million.
Operating margin expanded 320 bps to 5.6% from 2.4% in the
Following solid fiscal first-quarter results, management
anticipates fiscal second quarter revenue in the range of $128
million to $130 million, on the back of a mid-single-digit growth
in comparable store sales. Based on sales projections for the
quarter, the company expects earnings per share between 4 cents and
The Zacks Consensus Estimate for fiscal 2012 has climbed 4.6% in
the last 60 days to $1.60 per share, indicating an estimated
annualized growth of roughly 33.7%. For fiscal 2013, the Zacks
Consensus Estimate rose nearly 7.0% over the same timeframe to
$1.84 per share, reflecting year-over-year growth of nearly 14.6%.
Shares are presently trading at 22.1x 12-month forward earnings, on
par with its peer group average. On a price-to-book basis, shares
are currently trading at 3.96, a 112.9% premium to the peer group
average of 1.86x.
Nevertheless, the stock looks attractive given a trailing 12-month
ROE of 15.5%, which is substantially higher than the peer group
average of 7.2%. The company's long-term estimated earnings per
share growth rate of 19.4% also compares favorably to the peer
group growth rate of 19.0%.
The chart below shows a positive price movement since October 2011,
registering a solid growth of 115.4%. The stock has been
consistently trading above its 200-day moving average since
December 2, 2011. Moreover, the year-to-date return for the stock
is approximately 34.2%, compared with the S&P 500's return of
Everett, Washington-based Zumiez Inc. is a mall-based specialty
retailer of action-sports related apparel, footwear, equipment, and
accessories. The company targets young men and women in the age
group of 12 to 24 years, who seek popular brands that represent
lifestyle centered on extreme sports activities. Zumiez's stores
span across 2,900 square feet on average, and offer couches and
video game stations to entice customers to shop for extended
periods. As of May 26, 2012, the company operated 448 stores in the
United States and 11 stores in Canada. The company, founded in
1978, has a market cap of 1.11 billion.
ZUMIEZ INC (ZUMZ): Free Stock Analysis Report
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