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Category: Stock Market and Rocky Brands
Date: 24 October 2019 Stock Price: $32.99 We take a look at the 3rd 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
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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' 3rd quarter 2019 earnings report
Data below refers to quarterly data unless specified otherwise:
- Net sales: $67.197 million (up from $65.916 million for the same period of the previous year)
- Net sales increased by 1.94% over the last 12 months
- Cost of sales: $42.165 million (down from $43.516 million for the same period of the previous year)
- Cost of sales decreased by -3.1% over the last 12 months
- Net income: $5.616 million (up from $5.045 million for the same period of the previous year)
- Diluted earnings per share: $0.75 (up from $0.67 for the same period of the previous year)
- PE ratio of Rocky Brands: 11
- Diluted weighted-average shares outstanding: 7.455 million (down from 7.480 million for the same period of the previous year)
- Cash and cash equivalents: $6.044 million
- Cash and cash equivalents per share: $0.81
- Cash and cash equivalents makes up 2.45% of Rocky Brands market capital
- Cash and cash equivalents makes up 3.18% of Rocky Brands total assets
- Trade receivables: $50.7 million
- Trade receivables makes up 25% of Rocky Brands total assets
- Trade and receivables of Rocky Brands is in line with the level it was at 12 months ago.
- Trade receivables makes up 25% of Rocky Brands total assets
- Inventories: $82.881 million
- Inventories makes up 40.9% of Rocky Brands total assets
- Rocky Brands' inventories grew by 5.7% over the last 12 months
- Inventories makes up 40.9% of Rocky Brands total assets
- Stockholders equity of Rocky Brands: $161.881 million
- Stockholders equity per share: $21.71
- So Rocky Brands is trading at 1.51 times its stockholders equity which is well outside the expected range of between 2 and 4 that most firms then to trade at.
Rocky Brands' management commentary on their 3rd quarter results
NELSONVILLE, Ohio--(BUSINESS WIRE)-- Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial results for its third quarter ended September 30, 2019.
Jason Brooks, President and Chief Executive Officer, commented, “We continue to have success capitalizing on the key growth opportunities we have identified for our Company. Our retail division is benefitting from the investments we have made in people as well as systems & processes which are driving strong sales increases across both our Lehigh CustomFit model and ecommerce channels. At the same time, the focus we have placed on product innovation, enhanced consumer engagement, and stronger retail partnerships is fueling consistent gains for our wholesale business led most recently by our western, outdoor and commercial military categories. Importantly, we’ve been able to translate our top-line results into even stronger bottom line performances through gross margin expansion and our commitment to operational excellence. While we now face some near-term headwinds due to the tariff increase on footwear imports from China that went into effect in September, we believe the strength of our brand portfolio, margin enhancing growth prospects and internal manufacturing capabilities have us well positioned to deliver increased profitability over the long-term.”
Jason Brooks, President and Chief Executive Officer, commented, “We continue to have success capitalizing on the key growth opportunities we have identified for our Company. Our retail division is benefitting from the investments we have made in people as well as systems & processes which are driving strong sales increases across both our Lehigh CustomFit model and ecommerce channels. At the same time, the focus we have placed on product innovation, enhanced consumer engagement, and stronger retail partnerships is fueling consistent gains for our wholesale business led most recently by our western, outdoor and commercial military categories. Importantly, we’ve been able to translate our top-line results into even stronger bottom line performances through gross margin expansion and our commitment to operational excellence. While we now face some near-term headwinds due to the tariff increase on footwear imports from China that went into effect in September, we believe the strength of our brand portfolio, margin enhancing growth prospects and internal manufacturing capabilities have us well positioned to deliver increased profitability over the long-term.”
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 a good time for Rocky Brands stockholders. 5 years ago the stock was trading at around $13.10 a stock and its currently trading at $32.99 a stock. That's a return of 151.8% 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 high of $34.14 than it is to its 52 week low of $22.44 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 high of $34.14 than it is to its 52 week low of $22.44 which to us is a clear indication that the momentum and sentiment of Rocky Brands stock is very positive at this point in time.
Recent coverage of Rocky Brands
The extract below discusses the latest regarding Rocky Brands as obtained from Finance.yahoo.com
It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.
If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Rocky Brands (NASDAQ:RCKY). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.
Read the full article here
It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.
If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Rocky Brands (NASDAQ:RCKY). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.
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 (full value) price for Rocky Brands stock at $35.40 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 $35.40. Therefore we believe a good entry point into Rocky Brands stock is at $31.90 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 $35.40. Therefore we believe a good entry point into Rocky Brands stock is at $31.90 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) 4th quarter 2019 earnings report will be released towards the end of January 2020