PJR02 (47.52)

Outdoor Retailers

August 25, 2009 – Comments (1) | RELATED TICKERS: GMTN , CAB , BGFV

So I took a look at several outdoor sports retail stores to see which ones were in the best shape. Many people have been pushing these lately due to increased interest in more local vacations (camping, outdoor activities), and increases in sales in sporting and hunting goods.

I had initially quickly glanced through Gander Mountain (GMTN) and had felt really strong. The numbers from the spring indicate, while losing money, they hadn't lost as much money as the previous year, and things looked to be heading up. With lots of expansion possibility, I envisioned Gander expanding and building a reputation (one of my favorite local retailers due to amount of camping and hiking stuff compared with other stores).  As the stock price didn't move (as the S&P went up), I decide I should try to take a better look at it's finances and compare with some others. Gander is mainly in the Northeast/Upper Midwest, more regional. Revenue overall has been dropping, however gun sales have been positive (a big leader in hunting supplies). The earnings estimates that are out there seem unlikely, and if the huge increases happened, it does not show extreme profitability. Even if the company did start showing some positive signs, liabilities have increased as the long term debt dropped, so looking like the company will owe some money in the short term. If they have a good holiday season, stock may start increasing more significantly, but until then, don't expect much movement

Cabela's (CAB) is a much bigger giant, with more name recognition. However, not feeling that much stronger about it. There are relatively fewer Cabela stores then other outdoor retailers (however much bigger stores). Major earnings will come from this holiday season, will have to closely watch the September numbers, but don't really expect much improvement. Cabela's has also been deferring a lot of taxes, as well as long term debt growing. One positive aspect - cash on hand is good. If they have a good fall with hunting supplies, I could see this turning around going into the holiday shopping season

 Big 5 Sporting Goods Corp (BGFV) was the first one I felt positive about (and the only one I had never heard of before living in the Northeast). Big 5 has stores throughout the Western US, and the only one I looked at that paid a dividend. Debt has been slowly increasing, but revenue has been up as well. EPS seems to be staying in line year to year. I believe with this one just getting by, as well as paying a dividend and room to expand, investors will be more willing to wait this one out for the general recovery in the economy then Cabela's or Gander.

 The one negative with GMTN, CAB, and BGFV - all three are within $1 of their 52 week highs. One may argue this indicates they have recovered well from the stock market crash in the fall, but I think they have may have jumped too quickly.

 Dick's Sporting Goods (DKS) is the fourth one I looked at. Name recognition, spread out across the US, Sales and revenue have remained good with a huge cash flow (particularly when compared to the other retailers), that long term, it should be in good shape in the long term.

I don't have any money in any of the above companies, just kind of watching them (building my confidence) before throwing any money into them. If any one has any comments on how I did the analysis or other things I should have considered, let me know.