In its most recent earnings report, released last Thursday, interactive fitness products provider Peloton Interactive, Inc.’s (PTON) revenue grew 6.2% year-over-year to $805.2 million in the fiscal 2022 first quarter ended September 30, 2021. However, the company’s net loss came in at $376 million, compared to an income of $69.30 million in the year-ago period. Its loss per share came in at $1.25 compared to an EPS of $0.20 in the prior-year quarter. Moreover, PTON’s 34.06% trailing-12-month gross profit margin is lower than the industry average of 35.79%. In addition, its trailing-12-month EBITDA margin and net income margin are currently negative.
The stock has lost more than 60% over the past nine months. On November 9, 2021, the Thornton Law Firm announced its investigation against the company for potential violations of the securities disclosure laws. Also, in terms of forward EV/S ratio, its 3.85x is 159.7% higher than the 1.48x industry average. In addition, its 3.40x forward P/S is 159.9% higher than the 1.31x industry average. So, it’s wise to avoid PTON for now.
However, analysts expect the overall leisure industry to witness annualized earnings growth of 23% over the next five years. The easing of COVID-19 restrictions, pent-up demand, and an improving job market should bode well for the industry in the near term. The October job report surpassed expectations, with the unemployment rate falling to 4.6%. Also, employment in the leisure and hospitality sector has increased by 2.4 million in 2021.
Therefore, investors looking to benefit from the industry’s recovery could invest in quality leisure stocks Acushnet Holdings Corp. (GOLF), Vista Outdoor Inc. (VSTO), and Johnson Outdoors Inc. (JOUT) instead.
Acushnet Holdings Corp. (GOLF)
GOLF designs, develops, manufactures, and distributes golf products, both domestically and internationally. The company operates through four segments: Titleist Golf Balls, Titleist Golf Clubs, Titleist Golf Gear, and FootJoy Golf Wear.
On November 4, 2021, David Maher, GOLF’s President and CEO, said, “Our golf ball segment performed well against difficult year-over-year comparisons with robust demand across all models and markets. Double digit growth in our Titleist club and FootJoy golf wear segments were fueled by our next generation T-Series irons, continued success of our TSi metals and innovative new FootJoy footwear and apparel products. Our KJUS golf business continues to flourish both in the United States and Europe.”
GOLF’s net sales increased 8% year-over-year to $521.63 million for the fiscal third quarter ended September 30, 2021. Its gross profit increased 6.7% year-over-year to $268.84 million. Also, its total assets came in at $2.08 billion for the period ended September 30, 2021, compared to $1.87 billion for the period ended December 31, 2020.
For fiscal 2021, GOLF’s revenue and EPS are expected to grow 30.8% and 91.4% year-over-year to $2.11 billion and $2.45, respectively. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 50.7% to close yesterday’s trading session at $56.30.
GOLF has an A grade for Quality in our POWR ratings. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Vista Outdoor Inc. (VSTO)
VSTO designs, manufactures, and markets consumer products in the outdoor sports and recreation markets in the United States and internationally. The company operates through two segments, Shooting Sports and Outdoor Products.
On September 10, 2021, VSTO announced a definitive agreement to acquire San Diego-based Foresight Sports for $474 million in cash and available credit from the company’s revolving credit facility. This is expected to boost the financials of the company.
For the fiscal 2022 second quarter ended September 26, 2021, VSTO’s net sales increased 35.3% year-over-year to $778.46 million. The company’s gross profit increased 84.6% year-over-year to $298.92 million. Its net income came in at $139.54 million, up 75.2% year-over-year.
VSTO’s revenue is expected to come in at $2.93 billion in fiscal 2022, representing a 31.7% year-over-year rise. In addition, the company’s EPS is expected to increase 116.4% year-over-year to $7.92 in the current year. Also, it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 119.2% to close yesterday’s trading session at $44.61.
It’s no surprise that VSTO has an overall B rating, which equates to a Buy in our POWR Rating system. The stock has an A grade for Value, and a B grade for Sentiment and Quality.
VSTO is ranked #3 in the same industry. Click here to see the additional POWR Ratings for VSTO (Stability, Momentum, and Growth).
Johnson Outdoors Inc. (JOUT)
JOUT designs, manufactures, and markets camping, diving, watercraft, and marine electronics products worldwide. Its segments include Fishing; Camping; Watercraft Recreation; and Diving.
On August 9, 2021, Helen Johnson-Leipold, Chairman and CEO, stated, “Strong demand delivered another quarter of unprecedented results. Momentum in Fishing, Camping and Watercraft Recreation continued, and as pandemic-related travel restrictions are being lifted, our work to strengthen the SCUBAPRO brand has been paying off as diving begins to recover. Looking ahead, we’re focused on continuing to keep pace with demand and position Johnson Outdoors for marketplace success.”
JOUT’s net sales came in at $213.57 million, up 54.3% year-over-year for the fiscal third quarter ended July 2, 2021. Its gross profit came in at $97.51 million, up 55.9% year-over-year. Moreover, its operating profit came in at $38.1 million, up 194.7% year-over-year.
Analysts expect JOUT’s revenue and EPS to increase 27.2% and 63.3% year-over-year to $755.77 million and $8.93, respectively, in fiscal 2021. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 33.1% to close yesterday’s trading session at $113.36.
JOUT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system.
JOUT has an A grade for Sentiment, and a B grade for Value and Quality. Within the same industry, it is ranked #1. Click here to see the additional POWR Ratings for Growth, Momentum, and Stability for JOUT.
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PTON shares were trading at $51.18 per share on Wednesday afternoon, up $1.05 (+2.09%). Year-to-date, PTON has declined -66.27%, versus a 26.06% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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