1. Summer Infant (SUMR) designs, markets and distributes kids' health, safety and wellness products throughout North America and the U.K.
Quarter: Third-quarter net income increased 15% to $2.1 million and earnings per share rose 8.3% to 13 cents. Revenue increased 22% to $50 million. The gross margin remained steady at 36% and the operating margin declined from 7.9% to 6.4%. Summer Infant held $1.3 million of cash and $49 million of debt at the end of the quarter, translating to a reasonable debt-to-equity ratio of 0.6. During the past three years, Summer Infant has boosted revenue 60% annually, on average, and increased earnings per share 41% a year, on average.
Stock: Summer Infant shares trade at a trailing earnings multiple of 15, a forward earnings multiple of 11, a book value multiple of 1.5 and a sales multiple of 0.6, 18%, 29%, 63% and 57% discounts to industry averages. A PEG ratio of 0.5 reflects a 50% discount to estimated long-term fair value. Summer Infant has advanced 60% year-to-date and has delivered annualized gains of 11% since 2007. Summer Infant has fallen 19% from a 52-week high recorded in August. It missed analysts' consensus third-quarter earnings target by 9% and sales target by 1.1%.Consensus: Of analysts following Summer Infant, seven, or 88%, advocate purchasing its shares and one recommends holding them. None are advising clients to sell. A median price target of $10.50 suggests a looming 12-month return of 46%. Small-cap focused Needham & Co. offers a target of $12, implying a gain of 67%. On the low end of the spectrum, Canaccord Genuity forecasts that Summer Infant's stock will rise 25% to $9. The company is pushing into new markets. It recently launched its Prodigy Infant Car Seat and Travel System. Management has recently warned of margin contraction amid higher commodity costs. Still, increased shelf space and new product launches should sustain growth.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV