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TheStreet Open House

Will This Upgrade Help Columbia Sportswear (COLM) Stock Today?

NEW YORK (TheStreet) --Columbia Sportswear Company (COLM) was upgraded to "buy" from "neutral" at DA Davidson & Co. on Wednesday based on a valuation call and the company's 2014 first quarter earnings.

The company, which makes outdoor activity apparel, said net income for the 2014 first quarter was $22.3 million, or 63 cents per diluted share, compared to $10.1 million, or 29 cents per diluted share in the same quarter 2013.

Net sales increased 22% over the first quarter 2013 to $424.1 million from $348.3 million.

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Separately, TheStreet Ratings team rates COLUMBIA SPORTSWEAR CO as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate COLUMBIA SPORTSWEAR CO (COLM) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, COLM's share price has jumped by 37.64%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, COLM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 15.2%. Since the same quarter one year prior, revenues slightly increased by 6.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • COLM has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.78, which clearly demonstrates the ability to cover short-term cash needs.
  • 44.91% is the gross profit margin for COLUMBIA SPORTSWEAR CO which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.85% trails the industry average.
  • COLUMBIA SPORTSWEAR CO's earnings per share declined by 8.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, COLUMBIA SPORTSWEAR CO reported lower earnings of $2.70 versus $2.91 in the prior year. This year, the market expects an improvement in earnings ($3.30 versus $2.70).
  • You can view the full analysis from the report here: COLM Ratings Report
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