The coming days will see quarterly results from active lifestyle brand companies amid uncertainty from retail consolidation,
potential tax and policy, and diverse equipment category trends.
Andrew Burns of D.A. Davidson said the golf industry appears to be on solid footing, but the exercise equipment and outdoor
equipment businesses are mixed. Also, trends in shooting sports became negative.
“As 2017 progresses, we believe this backdrop will improve, driven by the combination of favorable winter weather conditions
(season-to-date), moderating store closures/retail bankruptcies, and the normalization of firearms trends,” Burns wrote in a
note.
Meanwhile, Burns believes Fox Factory Holding Corp (NASDAQ: FOXF) has the greatest opportunity for fundamental upside in 2017 due to
company-specific growth drivers that should lead to organic growth and margin improvement.
Burns, who has a Buy rating and $32 price target on Fox shares, looks for fourth-quarter revenue and EPS at $105.5 million and
$0.30, compared to consensus of $106.8 million and $0.30. Investors will focus on any color on additional OEM wins and aftermarket
trends from the company, which will report its financial results on February 15.
Following is a brief earnings preview of some of the other companies in the sector:
Acme United Corporation
(NYSE ACU): Buy rating, $28 price target, earnings date of February 23.
- Burns expects quarterly revenue and EPS of $25.8 million and $0.16 versus consensus of $25.6 million and $0.15. He expects
2017 guidance to be in line with Street expectations.
- The analyst would focus on any recent wins the company has had over the quarter, as well as the any initial responses on
the
first
aid app launched in the third quarter.Callaway Golf Co (NYSE: ELY): Buy, $14, Thursday.
- The analyst sees fourth-quarter revenue and EPS at $167.5 million and $(0.19), compared to consensus of $170.7 million and
$(0.17). Burns believes the company’s 2017 revenue guidance should marginally top consensus and is
well
positioned for continued growth and margin improvement in 2017.Nautilus, Inc. (NYSE: NLS): Neutral, $20, February 13.
- Burns looks for December quarter revenue and EPS of $128.4 million and $0.40, lower than consensus at $133.1 million and
$0.42.
- “We are still positive on NLS' long-term strategy, but are less certain on the company's ability to hit its 10–12 percent
long-term growth targets in 2017 given the
weakness
in a number of NLS' markets and products,” Burns continued.Vista Outdoor Inc (NYSE: VSTO): Buy, $35, February 9.
- The analyst estimates quarterly revenue and EPS estimates at $646.9 million and $0.44, down from consensus view of $676.6
million and $0.62.
- But, Burns is bullish on the company, saying its internal issues are fixable and external headwinds can soften. Additionally,
the analyst pointed out strength in ammunition business, with potential benefits for Bell, Giro and CamelBak brands.
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