COVID-19 lockdowns in China and the continuing Russia-Ukraine war have intensified global supply chain disruptions, hurting many retailers. However, high demand for outdoor-focused retail products should benefit retailers in this space as we approach summer.
Seasonal demand for outdoor-focused retail companies is projected to soar in the coming months on pent-up demand. The worldwide market for outdoor gear is expected to grow at a 6.1% CAGR from 2021 to 2026.
Given this backdrop, we think it could be wise to bet on fundamentally strong outdoor-focused retail stocks Vista Outdoor Inc. (VSTO), Johnson Outdoors Inc. (JOUT), Academy Sports and Outdoors, Inc. (ASO), and Columbia Sportswear Company (COLM).
Vista Outdoor Inc. (VSTO)
VSTO in Anoka, Minn., 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 April 28, 2022, VSTO’s acquisition of Foresight Sports was honored by the trade publication Mergers & Acquisitions. VSTO’s CEO, Chris Metz, said, “We are honored that Mergers & Acquisitions recognized this transaction as the top deal for 2021 in the Consumer Products-Recreation category.”
VSTO’s net sales came in at $794.65 million for the third quarter, ended Dec. 26, 2021, up 38.3% year-over-year. Its net income came in at $118.14 million, up 49.8% year-over-year, while its EPS came in at $2.00, up 52.8% year-over-year. Also, its gross profit was $281.47 million, up 72.4% year-over-year.
VSTO’s revenue is expected to increase 34.7% to $3 billion in 2022. Its EPS is estimated to increase 120.5% to $8.07 in 2022. Also, it surpassed EPS estimates in each of the four trailing quarters. The stock has gained 11.3% in price over the past year to close yesterday’s session at $36.29.
VSTO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
VSTO has an A grade for Value and a B grade for Growth and Quality. Within the 36-stock Athletics & Recreation industry, it is ranked first. Click here to see the additional VSTO ratings for Momentum, Sentiment, and Stability.
Johnson Outdoors Inc. (JOUT)
Racine, Wisc.-based JOUT designs, manufactures, and markets seasonal and outdoor recreational products for fishing worldwide. It operates through four segments: Fishing; Camping; Watercraft Recreation; and Diving.
On April 28, 2022, JOUT and the National Wildlife Federation agreed to advance natural resource conservation by creating the Clean Earth Challenge. This program aims to build clean and sustainable environments for future generations and has already garnered corporate appreciation.
JOUT’s camping sales increased 15.9% year-over-year to $14.13 million for its fiscal first quarter, ended Dec. 31, 2021. Its diving sales came in at $16.49 million, up 17% year-over-year. Furthermore, its total current assets came in at $486.41 million for the period ended Dec. 31, 2021, compared to $417.26 million for the period ended Jan.1, 2021.
Analysts expect JOUT’s revenue to be $795.64 million in 2023, representing a 5.6% year-over-year rise. The company’s EPS is expected to increase 14% per annum for the next five years. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has declined 2.1% in price to close its last trading session at $77.57.
JOUT has an overall B rating, which indicates a Buy in our proprietary rating system. It has an A grade for Sentiment and a B grade for Value. JOUT is ranked #5 in the Athletics & Recreation industry. Click here to see the additional POWR Rating for Growth, Momentum, Stability, and Quality for JOUT.
Academy Sports and Outdoors, Inc. (ASO)
ASO and its subsidiaries operate as a sporting goods and outdoor recreational products retailer in the United States. The Katy, Tex., company sells its products under the Academy Sports + Outdoors, Magellan Outdoors, BCG, O’rageous, Outdoor Gourmet, and Freely brand names and currently operates approximately 259 retail locations in 16 contiguous states.
On March 29, 2022, Ken Hicks, Chairman, President, and CEO, said, “Academy is well positioned for substantial long-term growth in its existing stores with our broad assortment of great products from the best national and quality private brands, excellent customer service, expanding omnichannel capabilities, and multiple new store openings in our current and new markets.”
ASO’s net sales for the fourth quarter, ended Jan. 29, 2022, came in at $1.81 billion, up 13.2% year-over-year. Its net income was $141.77 million, up 54.9% year-over-year. In addition, its EPS came in at $1.57, up 61.9% year-over-year.
Analysts expect ASO’s revenue to increase 6.1% year-over-year to $7.10 billion in 2024. Its EPS is expected to increase 11% per annum for the next five years. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 24.1% over the past year to close yesterday’s session at $38.22.
It is no surprise that ASO has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has a B grade for Value, Sentiment, and Quality. ASO is ranked #6 in the Athletics & Recreation industry. Click here to get all the ASO ratings (Growth, Momentum, and Stability).
Columbia Sportswear Company (COLM)
COLM and its subsidiaries design, source, market, and distribute outdoor, active, and everyday lifestyle apparel, footwear, accessories, and equipment in the United States, Latin America, the Asia Pacific, Europe, the Middle East, Africa, and Canada. The Portland, Ore.-based company operates some 455 retail stores.
On April 28, 2022, COLM announced an expansion of capabilities at its Robards, Kentucky, distribution center. Tim Boyle, President, CEO, and Chairman of the Board said, “We have had a distribution center in Kentucky since 2004. We think investing in this area will be good for our business, strengthening our supply chain and allowing us to hire top-notch talent.”
For its fiscal 2022 first quarter, ended March 31, 2022, COLM’s net sales were $761.51 million, up 21.7% year-over-year. Its gross profit came in at $378.45 million, up 17.7% year-over-year. Also, its net income was $66.84 million, up 19.6% year-over-year, while its EPS came in at $1.03, up 22.6% year-over-year.
COLM’s revenue is expected to be $3.66 billion in fiscal 2022, representing a 17.1% year-over-year rise. In addition, the company’s EPS is expected to increase 31.7% per annum for the next five years. Also, it surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has declined 8.3% in price over the past month to close yesterday’s trading session at $82.79.
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VSTO shares were unchanged in premarket trading Tuesday. Year-to-date, VSTO has declined -21.23%, versus a -12.46% 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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