Markets

Columbia Sportswear Gains Despite Prevailing Headwinds

Columbia Sportswear Company'sCOLM strategic initiatives, along with a VGM Score of 'A' and expected long-term earnings growth rate of 9.3% make it look attractive, despite prevailing headwinds. Notably, the company's earnings have outpaced the Zacks Consensus Estimate for 17 straight quarters, with a trailing four-quarter average of 16.9%.

Shares of this Zacks Rank #3 (Hold) have rallied 4.6% in the past one month and has outperformed the Consumer Discretionary sector, which occupies a top 25% (4 out of 16) as well as the S&P 500 index. Meanwhile, the sector has gained 1.3%, while the index improved 0.8%.

Driving Factors

Columbia Sportswear is a leading player in active wear and footwear markets in the U.S. and commands a portfolio of well-recognized brands. Also, management undertakes brand-enhancing initiatives that further strengthen its presence in the apparel industry. Additionally, the company makes strategic joint ventures and acquisitions in order to expand its market share. Evidently, Columbia Sportswear has entered into several sponsorship and Licensing Agreement in 2016 that has helped boost its market share.

Moreover, the company's recent launch of in-house European, Columbia and SOREL brands' eCommerce businesses in ten countries remains encouraging. This transition is anticipated to help drive a superior brand connection and consumer experience, grow sales with an expanded product offering, while leveraging existing physical distribution infrastructure.

Meanwhile, Columbia Sportswear has a solid international presence and has the largest opportunity in China, where it commenced a joint venture with Swire Resources (distributor in China) in Jan 2014. To this end, the company is focused on improving the productivity of its distribution channels in China.

Hurdles Still to Cross

We note that Columbia Sportswear has been facing challenges in the U.S. region, especially in its U.S. wholesale front. This, coupled with tough geopolitical conditions in Korea is hampering the overall sales growth of the company. Further, Columbia and prAna brands are suffering setbacks in Korea as there is a general shift of consumer preference away from outdoor sector in the region. In fact, its sales have missed the consensus mark in three of the last six quarters.

In addition, higher excise duties may put pressure on margin and, in turn, mar the overall profitability. Moreover, currency headwind remains a major concern for the company and is expected to impact negatively in fiscal 2017.

Bottom Line

We expect that the company may efficiently offset these headwinds by its robust strategies.

Meanwhile, investors can count on better-ranked stocks in the same industry that include Cherokee Inc. CHKE , G-III Apparel Group, Ltd. GIII and Gildan Activewear Inc. GIL .

Cherokee has a long-term earnings growth rate of 15% and currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

G-III Apparel, a Zacks Rank #1 stock, has a long-term earnings growth rate of 15%. Also, the stock was up 26.4% in the past three months.

Gildan Activewear has a Zacks Rank #2 (Buy) and a long-term earnings growth rate of 12.3%. Also, the stock has delivered an average earnings beat of 4.4% in the last four quarters.

Sell These Stocks. Now.

Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500.

See today's Zacks "Strong Sells" absolutely free >>.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Columbia Sportswear Company (COLM): Free Stock Analysis Report

G-III Apparel Group, LTD. (GIII): Free Stock Analysis Report

Gildan Activewear, Inc. (GIL): Free Stock Analysis Report

Cherokee Inc. (CHKE): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

GIII APEX GIL COLM

Other Topics

Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More