Why Johnson Outdoors Inc. Stock Surged 26%

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What happened

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Shares of Johnson Outdoors Inc. (NASDAQ: JOUT) were climbing last month after the recreation specialist posted another strong earnings report. The stock gained 10% in the two days following its Aug. 4 third-quarter report and finished August up 26%, according to data from S&P Global Market Intelligence.

As the chart below shows, the stock gained steadily over the first half of the month on momentum from the earnings report.

So what

Revenue increased 11% to $155.3 million, beating estimates of $149 million, on the strength of new products in Fishing and other warm-weather recreation segments.

Fishing, which makes up the majority of the company's sales and also has the highest profit margins, grew 18% in the quarter to $104 million, and Diving sales climbed 17% thanks to new innovations.

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Further down the income statement, operating income nearly doubled to $24.7 million as the company erased a loss last year in Diving and saw margins improve in all categories. Earnings per share more than doubled to $1.65 from $0.68, with the help of a lower tax rate, crushing estimates at $1.09. With an earnings beat of that size, it wasn't surprising to see the stock soar following the report.

CEO Helen Johnson-Leipold called the quarter's results "outstanding" and credited the company's "continued focus and investment on delivering market-winning innovation."

Now what

Johnson Outdoors did not issue guidance, but the maker of products including canoes and camping equipment looks poised to finish out the year on a strong note as the stock is now up 60% this year after two consecutive blowout earnings report. With discretionary spending on recreation growing thanks to a strong economy and its impressive track record of innovation, Johnson Outdoors should continue to outperform the market.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.