Clothier Columbia Sportswear (NASDAQ: COLM) surged as much as 14% higher Friday before closing the day up 12.3%.
This being earnings season, you might imagine that Columbia stock's surge Friday had something to do with an earnings report. You'd be right.
Thursday evening, after close of trading, Columbia reported its fiscal fourth-quarter and full-year 2016 earnings. For the quarter, sales were up 3% year over year, at $717.4 million, with net income rising 34% in comparison to Q4 2015 -- to $1.20 per share.
Columbia's sales number fell somewhat short of the $756.8 million in revenues that Wall Street had expected it to announce. Happily, the earnings number beat expectations (for $1.10 per share) quite handily.
Image source: Columbia Sportswear.
Full-year sales inched up only 2%, to $2.38 billion, and full-year profits rose 10%, to $2.72 per share.
As far as guidance goes, Columbia management advised that they are looking to grow that sales number by a further 4% in fiscal 2017, hold profits steady at $2.72 in the worst case -- and grow them only 4%, to $2.82 per share, even in the best-case scenario.
At Columbia's current stock price of just under $60 a share, that works out to a valuation of at least 21.3 times current-year earnings on the company's stock -- and even higher if the company fails to max out earnings. And honestly, with the company coming off a year showing only 10% earnings growth and promising only 4% growth this year -- and with most analysts saying Columbia is unlikely to exceed high-single-digit growth over the next five years -- 21 times earnings seems a pretty steep price to pay for Columbia Sportswear stock today.
If I were an owner, I'd be looking to take advantage of Friday's price spike, and get out of the stock while the going is good.
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