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Bull of the Day: Johnson Outdoors Inc. (JOUT)

Zacks

Johnson Outdoors Inc. (JOUT) is a leading global outdoor recreation company that turns ideas into adventure with innovative, top-quality products. The Company designs, manufactures and markets a portfolio of winning, consumer-preferred brands across four categories: Watercraft, Marine Electronics, Diving and Outdoor Equipment. Johnson Outdoors' familiar brands include, among others: Old Town canoes and kayaks; Ocean Kayak and Necky kayaks; Lendal paddles; Escape electric boats; Minn Kota motors; Cannon downriggers; Humminbird, Bottom Line and Fishin' Buddy fishfinders; Scubapro and UWATEC dive equipment; Silva compasses and digital instruments; and Eureka! tents.

Recent Earnings

Last week, management posted record high third quarter earnings with net sales improving by +11.5% year over year (YoY). Specifically the fishing segment saw sales improve by +18%, and diving sales rise by +17% YoY. Further, operating profits leaped up by +81.6% while gross margins were up 290 basis points YoY. Lastly, management was able to generate all of these impressive numbers and have their balance sheet show $94 million in cash with zero debt.

Management’s Take

According to Helen Johnson-Leipold, Chairman and CEO, “This quarter’s outstanding results emphasize the importance of our continued focus and investment on delivering market-winning innovation driven by a deeper understanding of, and unique insights into outdoor recreation consumers. Exceptional new products and technologies are powering tremendous growth in Fishing. Likewise, innovation in core life-support categories has created positive marketplace momentum and improved performance in Diving. At the same time, our unique flux-ring technology in Jetboil6 and innovative Predator series of fishing boats from Old Town have helped us grow share in very challenging Camping and Watercraft Recreation markets. Overall, we are well-positioned to end the year strong with solid momentum heading into the next fiscal year. Looking ahead, we expect to see Fishing grow at a more normalized rate. We will continue to advance progress against our three key strategic plan priorities – richer consumer insights, enhanced innovation processes and digital sophistication the cornerstones of a foundation for success in delivering accelerated, sustained profitable growth long-term.

Price and Earnings Consensus Graph

As you can see in the graph below, JOUT’s strong earnings performance caused both the stock price and future earnings estimates to skyrocket.

Johnson Outdoors Inc. Price and Consensus

Johnson Outdoors Inc. Price and Consensus | Johnson Outdoors Inc. Quote

Increasing Earnings Estimates

Due to management’s focus on innovation and tapping into their customers’ needs, earnings estimates for Q4 17m Q1 18m FY 17 and FY 18 have all seen positive revisions over the past 7 days; Q4 17 improved form $0.00 to $0.01, Q1 18 rose from $0.03 to $0.04, FY 17 was lifted from $2.41 to $3.50, and FY 18 jumped up from $2.46 to $3.13.

Bottom Line

Management has stressed two major points, the continuation of investment in new products to improve overall performance and to be a leader in product innovation. The success in these initiatives can be seen in their Humminbird line which won the prestigious ICAST Best of Electronics 2017 award for the seventh consecutive year and, their innovation in buoyancy compensators and dive computers. Due to these innovations and new technologies JOUT is expected to see continued earnings growth through 2018.


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