Why Shares of Quiksilver, Inc. Are Surging After-Hours

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Quiksilver , which briefly topped a gain of 15% this morning before slipping back, have surged again in early after-hours trading to a gain of nearly 12% on the outdoor-sports clothing retailer's solid earnings report.

So what: Quiksilver's first-quarter revenue came in at $341 million, down 14% year-over-year in nominal terms and down 4% on a constant-currency basis. The company's adjusted EBITDA fell from$16 million in the year-ago quarter to $10 million in the latest quarter, but its losses per share shrank from $0.13 a year ago to $0.11 in the latest quarter. Both top- and bottom-line results surpassed Wall Street's expectations, which had sought $337.4 million in revenue and a loss of $0.14 per share.

Quiksilver also offered guidance for the upcoming quarter and for the full fiscal year. It is now projecting $340 million in second-quarter revenue and $8 million in adjusted EBITDA. Full-year revenue is expected to range from $1.38 billion to $1.45 billion, with full-year adjusted EBITDA ranging from $70 million to $80 million. Both quarterly and annual revenue projections are weaker than Wall Street's expectations, as analysts had modeled $368.6 million in second-quarter revenue and $1.49 billion in full-year revenue.

Now what: Quiksilver's stock has been one of the worst on the market over the past year, even after accounting for its double bounce today. Shares have lost three-quarters of their value since last March (including tonight's after-hours pop), but that's to be expected of a company that has yet to return to growth in its core metrics after years of fundamental backsliding.

Quiksilver's revenuehas fallen by 20% since mid-2012, and both EBITDA and EPS have collapsed from positive territory into deep losses since that time. Forward guidance continues this trend on the top line, as the company reported $1.57 billion in revenue for its 2014 fiscal year. However, Quiksilver's EBITDA guidance range is a big upgrade over 2014's result of $39 million, so there does appear to be improvement in the company's cost controls, even if consumer interest has not yet rebounded. This bottom-line improvement might be enough to attract short-term speculative interest, but Quiksilver can't be considered a legitimate long-term retail investment if its top line continues to decline.

The article Why Shares of Quiksilver, Inc. Are Surging After-Hours originally appeared on Fool.com.

Alex Planes has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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