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Category: Stock Market and Rocky Brands
Date: 14 June 2020 Stock Price: $20.84 We take a look at the 1st quarter earnings report of their 2019 fiscal year of Rocky Brands, a designer and manufacturer of footwear and apparel under brands such as Rocky, Durango and Georgia Boot. The Covid-19 pandemic has hit the group's revenues hard with 1st quarter 2020 earnings declining by 15.5% compared to the same quarter of the prior year
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About Rocky Brands
Rocky Brands, Inc. is a leading designer, manufacturer and marketer of premium quality footwear and apparel marketed under a portfolio of well recognized brand names including Rocky®, Georgia Boot®, Durango®, Lehigh®, and the licensed brand Michelin®.
Military
While we are focused on continuing to build our wholesale and retail business, we also actively bid on footwear contracts with the U.S. military, which requires products to be made in the U.S. Our manufacturing facilities in Puerto Rico, a U.S. territory, allow us to competitively bid for such contracts. We have received an order to fulfill a contract to the U.S. Military to produce “Hot Weather” combat boots. The first year of the contract includes a minimum purchase amount of $3.0 million and a maximum of $15.0 million. Shipment of the boots began in the first quarter of 2013. The contract includes an option for four additional years with the same terms.
All of our footwear for the U.S. military is currently branded Rocky. We believe that many U.S. service men and women are active outdoor enthusiasts and may be employed in many of the work and duty markets that we target with our brands. As a result, we believe our sales to the U.S. military serve as an opportunity to reach our target demographic with high quality branded products.
Wholesale
In the U.S., we distribute Rocky, Georgia Boot, Durango and Michelin products through a wide range of wholesale distribution channels. As of December 31, 2013, our products were offered for sale at over 10,000 retail locations in the U.S. and Canada.
We sell our products to wholesale accounts in the U.S. primarily through a dedicated in-house sales team who carry our branded products exclusively, as well as independent sales representatives who carry our branded products and other non-competing products. Our sales force for Rocky is organized around major accounts, including Bass Pro Shops, Cabela’s, Dick’s Sporting Goods, Tractor Supply Company and Gander Mountain, and around our target markets: outdoor, work, duty, commercial military and western. For our Georgia Boot and Durango brands, our sales employees are organized around each brand and target a broad range of distribution channels. All of our sales people actively call on their retail customer base to educate them on the quality, comfort, technical features and breadth of our product lines and to ensure that our products are displayed effectively at retail locations.
Our wholesale distribution channels vary by market:
Military
While we are focused on continuing to build our wholesale and retail business, we also actively bid on footwear contracts with the U.S. military, which requires products to be made in the U.S. Our manufacturing facilities in Puerto Rico, a U.S. territory, allow us to competitively bid for such contracts. We have received an order to fulfill a contract to the U.S. Military to produce “Hot Weather” combat boots. The first year of the contract includes a minimum purchase amount of $3.0 million and a maximum of $15.0 million. Shipment of the boots began in the first quarter of 2013. The contract includes an option for four additional years with the same terms.
All of our footwear for the U.S. military is currently branded Rocky. We believe that many U.S. service men and women are active outdoor enthusiasts and may be employed in many of the work and duty markets that we target with our brands. As a result, we believe our sales to the U.S. military serve as an opportunity to reach our target demographic with high quality branded products.
Wholesale
In the U.S., we distribute Rocky, Georgia Boot, Durango and Michelin products through a wide range of wholesale distribution channels. As of December 31, 2013, our products were offered for sale at over 10,000 retail locations in the U.S. and Canada.
We sell our products to wholesale accounts in the U.S. primarily through a dedicated in-house sales team who carry our branded products exclusively, as well as independent sales representatives who carry our branded products and other non-competing products. Our sales force for Rocky is organized around major accounts, including Bass Pro Shops, Cabela’s, Dick’s Sporting Goods, Tractor Supply Company and Gander Mountain, and around our target markets: outdoor, work, duty, commercial military and western. For our Georgia Boot and Durango brands, our sales employees are organized around each brand and target a broad range of distribution channels. All of our sales people actively call on their retail customer base to educate them on the quality, comfort, technical features and breadth of our product lines and to ensure that our products are displayed effectively at retail locations.
Our wholesale distribution channels vary by market:
- Our outdoor products are sold primarily through sporting goods stores, outdoor specialty stores, catalogs and mass merchants.
- Our work-related products are sold primarily through retail uniform stores, catalogs, farm store chains, specialty safety stores, independent shoe stores and hardware stores.
- Our duty products are sold primarily through uniform stores and catalog specialists.
- Our commercial military products are sold primarily through base exchanges such as AAFES and consumer websites.
- Our western products are sold through western stores, work specialty stores, specialty farm and ranch stores and more recently, fashion oriented footwear retailers.
- Our lifestyle products are sold primarily through fashion oriented footwear retailers.
Overview of Rocky Brands' 1st quarter 2020 earnings report
Data below refers to quarterly data unless specified otherwise:
- Net sales: $55.720 million (down from $65.929 million for the same period of the previous year)
- Net sales increased by -15.5% over the last 12 months
- Cost of sales: $36.400 million (down from $42.951 million for the same period of the previous year)
- Cost of sales decreased by -15.3% over the last 12 months
- Net income: $1.118 million (down from $3.605 million for the same period of the previous year)
- Diluted earnings per share: $0.16 (up from $0.48 for the same period of the previous year)
- PE ratio of Rocky Brands: 32.5
- Diluted weighted-average shares outstanding: 7.386 million (down from 7.434 million for the same period of the previous year)
- Cash and cash equivalents: $44.247 million
- Cash and cash equivalents per share: $5.99
- Cash and cash equivalents makes up 28.7% of Rocky Brands market capital
- Cash and cash equivalents makes up 19.9% of Rocky Brands total assets
- Trade receivables: $33.3 million
- Trade receivables makes up 15% of Rocky Brands total assets
- Trade and receivables of Rocky Brands declined by 20% over the last 12 months
- Inventories: $77.214 million
- Inventories makes up 34.8% of Rocky Brands total assets
- Rocky Brands' inventories grew by 10.4% over the last 12 months
- Stockholders equity of Rocky Brands: $164.016 million
- Stockholders equity per share: $22.20
- So Rocky Brands is trading at 1.07 times its stockholders equity which is well outside the expected range of between 2 and 4 that most firms then to trade at.
- The average price to book value of firms in the S&P500 is 3.7
Rocky Brands' management commentary on their 1st quarter 2020 results
NELSONVILLE, Ohio--(BUSINESS WIRE)-- Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial results for its first quarter ended March 31, 2020.
Jason Brooks, President and Chief Executive Officer, commented, “Our business is holding up well despite one of the most difficult operating environments in our company’s long history. We entered 2020 with good momentum thanks to the multi-year execution of strategic initiatives that have enhanced our brands’ positioning in the marketplace, strengthened our relationships with our consumers and retail customers, and fortified our balance sheet. While we face challenges due to the COVID-19 pandemic, particularly within our brick and mortar wholesale channel as much of the country continues to shelter-at-home, we have taken decisive actions to capitalize on our digital and distribution center capabilities and increase liquidity. Over the past several weeks, we’ve experienced an acceleration in sales on our ecommerce sites as well as an uptick in new account growth for our online Lehigh CustomFit safety shoe business as many of our consumers work in critical industries that are keeping America running during this crisis. As Rocky Brands has done in the past, I am confident that we will weather this storm and emerge in a position to resume delivering sustained growth, increased profitability and enhanced value for our shareholders.”
Jason Brooks, President and Chief Executive Officer, commented, “Our business is holding up well despite one of the most difficult operating environments in our company’s long history. We entered 2020 with good momentum thanks to the multi-year execution of strategic initiatives that have enhanced our brands’ positioning in the marketplace, strengthened our relationships with our consumers and retail customers, and fortified our balance sheet. While we face challenges due to the COVID-19 pandemic, particularly within our brick and mortar wholesale channel as much of the country continues to shelter-at-home, we have taken decisive actions to capitalize on our digital and distribution center capabilities and increase liquidity. Over the past several weeks, we’ve experienced an acceleration in sales on our ecommerce sites as well as an uptick in new account growth for our online Lehigh CustomFit safety shoe business as many of our consumers work in critical industries that are keeping America running during this crisis. As Rocky Brands has done in the past, I am confident that we will weather this storm and emerge in a position to resume delivering sustained growth, increased profitability and enhanced value for our shareholders.”
COVID-19 Update
Below is a summary of the current status of Rocky Brands’ operations and the actions taken to mitigate the financial impact of COVID-19 and preserve liquidity to-date.
Below is a summary of the current status of Rocky Brands’ operations and the actions taken to mitigate the financial impact of COVID-19 and preserve liquidity to-date.
- The Company’s 200,000 square-foot distribution center in Logan, Ohio has remained open and fully operational.
- The Company’s manufacturing facilities in Puerto Rico and the Dominican Republic have reopened following temporary government mandated shutdowns and are currently operating at a reduced capacity.
- The Company has reduced operating expenses by approximately $1.5 million for the year.
- The Company has delayed approximately $15 million in planned inventory receipts from third party suppliers.
- The Company drew down $20 million on its credit facility as a precautionary measure. As of March 31, 2020, the Company had $44.2 million in cash and cash equivalents and $40 million in available borrowings on its credit facility.
- The Company has suspended all share repurchases indefinitely.
Rocky Brands (NASDAQ: RCKY) stock price history
The image below, obtained from Google, shows the stock price history of Rocky Brands over the last 5 years. And it's been an okay time for Rocky Brands stockholders. 5 years ago the stock was trading at around $17.80 a stock and its currently trading at $20.84 a stock. That's a return of 17.1% provided to Rocky Brands stockholders over the last 5 years.
The stock of Rocky Brands is trading at a lot closer to its 52 week low of $14.96 than it is to its 52 week high of $34.14 which to us is a clear indication that the momentum and sentiment of Rocky Brands stock is very positive at this point in time.
The stock of Rocky Brands is trading at a lot closer to its 52 week low of $14.96 than it is to its 52 week high of $34.14 which to us is a clear indication that the momentum and sentiment of Rocky Brands stock is very positive at this point in time.
Rocky Brands (RCKY) stock vs Foot Locker (FL) stock
The image below shows the stock price performance of Rocky Brands (RCKY) and Foot Locker (FL) over the last 3 years. From the image below it is clear that the stock of Rocky Brands has easily outperformed the stock of Foot Locker over the last 3 years. Over the last 3 years the stock of Rocky has increased by 56.10% while the stock of Foot Locker has declined by -39.3% over the last 3 years.
Recent coverage of Rocky Brands
The extract below discusses the latest regarding Rocky Brands as obtained from Stockopedia.com
Shares in Rocky Brands Inc (NSQ:RCKY) are currently trading at 20.8 but a key question for investors is how the economic uncertainty caused by Coronavirus will affect the price. One way of making that assessment is to examine where its strengths lie...
Rocky Brands Inc is a player in the Textiles & Apparel sector and its share price has moved by -14.8% over the past three months. In volatile markets, many investors are keen to buy what they think are cheap stocks - but it's essential to recognise the difference between a genuine bargain and a value trap. Often, the quality of the stock makes all the difference.
The good news is that Rocky Brands Inc scores well against some important financial and technical measures. In particular, it has strong exposure to two influential drivers of investment returns: high quality and a relatively cheap valuation.
Read the full article here
Shares in Rocky Brands Inc (NSQ:RCKY) are currently trading at 20.8 but a key question for investors is how the economic uncertainty caused by Coronavirus will affect the price. One way of making that assessment is to examine where its strengths lie...
Rocky Brands Inc is a player in the Textiles & Apparel sector and its share price has moved by -14.8% over the past three months. In volatile markets, many investors are keen to buy what they think are cheap stocks - but it's essential to recognise the difference between a genuine bargain and a value trap. Often, the quality of the stock makes all the difference.
The good news is that Rocky Brands Inc scores well against some important financial and technical measures. In particular, it has strong exposure to two influential drivers of investment returns: high quality and a relatively cheap valuation.
Read the full article here
Rocky Brands (NASDAQ: RCKY) latest stock valuation
So what is Rocky Brands stock worth based on the release of their latest earnings report provided? Based on Rocky Brands latest earnings report our valuation models provide a target price (full value price) for Rocky Brands stock at $29.70 a stock. We therefore believe that the stock of Rocky Brands is undervalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $29.7. Therefore we believe a good entry point into Rocky Brands stock is at $26.80 or below. We expect the stock of Rocky Brands to kick up from current levels in coming weeks and months to levels closer to our target (full value) price.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $29.7. Therefore we believe a good entry point into Rocky Brands stock is at $26.80 or below. We expect the stock of Rocky Brands to kick up from current levels in coming weeks and months to levels closer to our target (full value) price.
Next earnings release date for Rocky Brands
It is expected that Rocky Brands (NASDAQ: RCKY) 2nd quarter 2020 earnings report will be released towards the end of August 2020