Columbia Sportswear Company (COLM) markets and distributes everyday outdoor, activity and lifestyle apparel, footwear, accessories and equipment. The company offers a wide range of products for activities on snow and ice. On the other hand, Canada Goose Holdings Inc. (GOOS) designs, manufactures and sells performance luxury clothing and accessories for fall, winter and spring.
People are already preparing for winter. According to a survey, 31% of U.S. consumers said they would start shopping for the holidays before the end of October, while a cumulative 55% of consumers are expected to start shopping before Thanksgiving. In addition, one in four consumers expect to spend more on Christmas than last year. With significant progress on the vaccination front, outdoor activities have multiplied and consumers have regained confidence. This should bode well for COLM and GOOS in the coming months.
In terms of last year’s performance, GOOS gained 10.9% versus 10.2% for COLM. Also, the 19.8% gain in GOOS year-to-date compares to COLM’s 9.7% return. Over the past six months, GOOS has fallen 10.2%, while COLM is down 10.7%.
But which stock is a better buy now? Let’s find out.
On September 8, COLM unveiled Omni-Heat ™ Infinity, a new metallic liner material in gold in a scientifically designed pattern to optimize warmth and breathability, which will be available this fall as part of the company’s apparel offering. “Omni-Heat Infinity extends our best-selling platform of patented technologies, and we look forward to showcasing this groundbreaking innovation in what will be Columbia’s largest campaign in 83 years of history,” said Joe Boyle, president by Columbia Marque.
On August 18, GOOS announced its intention to repurchase up to 5,943,239 Subordinate Voting Shares during the twelve months beginning August 20, 2021 and ending no later than August 19, 2022. This is expected to significantly increase the shareholder value.
Recent financial results
COLM’s net sales increased 78.9% year-over-year to $ 566.37 million in the fiscal second quarter ended June 30. Gross profit stood at $ 292.52 million, up 100% from the same period last year. Net profit increased 180.2% from a year ago value to $ 40.68 million. The company’s EPS increased 179.2% year-over-year to $ 0.61.
For the first fiscal quarter ended June 27, GOOS revenue increased 115.7% year-over-year to C $ 56.30 million ($ 44.25 million). Its gross profit increased 539.6% from its value a year ago to C $ 30.70 million ($ 24.13 million), while its operating loss increased by 2 , 4% year on year to reach C $ 60.70 million ($ 47.71 million). Additionally, the company’s loss per share increased 10.9% year-over-year to C $ 0.51.
Past and expected financial performance
COLM’s net profit and EPS have grown at CAGRs of 23.5% and 25.9% over the past three years, respectively. Analysts expect COLM’s revenue to grow 26.5% in the current year and 10.1% the following year. The company’s EPS is expected to grow 186.4% in the current year and 16.6% next year. In addition, its EPS is expected to grow by 31.7% per year over the next five years.
On the other hand, GOOS net profit and EPS have declined at CAGRs of 10.8% and 10.6% over the past three years, respectively. Analysts expect the company’s revenue and EPS to increase 17.4% and 55.6%, respectively, next year. In addition, GOOS BPA is expected to grow by 33.9% per year over the next five years.
GOOS is more profitable with a gross profit margin and FCF leveraged margin of 60.75% and 16.57%, compared to 50.55% and 13.46% for COLM, respectively.
However, COLM’s ROE, ROA and ROTC of 14.52%, 7.88%, and 9.94% compare to the 12.48%, 4.82% and 5.76% of GOOS, respectively.
In terms of advance PER, GOOS is currently trading at 41.68x, which is 48.7% higher than COLM, which is currently trading at 21.40x. In addition, GOOS’s forward EV / EBITDA ratio of 20.23 is 42.2% higher than COLM’s 11.69.
So, COLM is relatively affordable here.
COLM has an overall rating of B, which is equivalent to a purchase rating in our proprietary POWR rating system. On the other hand, GOOS has an overall D rating, which translates into a Selling Rating. POWR scores are calculated taking into account 118 different factors, each factor being weighted to an optimal degree.
COLM has a B grade for quality, in line with its net profit margin of 9.08%, which is 44.5% above the industry average of 6.29%. On the other hand, the GOOS has a C grade for quality. This is justified because the GOOS net profit margin of 6.81% is 8.3% above the industry average.
COLM has a C rating for stability and GOOS has a D rating for stability, consistent with its beta of 1.5.
Of the 36 stocks in the athletics and recreation industry, COLM is ranked # 7. Alternatively, among the 63 stocks in the fashion and luxury industry, GOOS is ranked 62nd.
Beyond what we have stated above, we have also rated stocks for stability, momentum, value and growth. Click here to see all of COLM’s notes. Also get all GOOS ratings here.
COLM and GOOS are expected to see an increase in their product sales before winter. However, a fundamentally strong and relatively lower valuation makes COLM a better buy here.
Our research shows that the chances of success increase when investing in stocks with an overall strong buy or buy rating. See all of the top rated stocks in the athletics and recreation industry here. Also click here to see the top rated stocks in the fashion and luxury sector.
COLM stock was trading at $ 96.51 per share on Friday morning, up $ 0.67 (+ 0.70%). Year-to-date, COLM has gained 11.29%, compared to a 16.25% increase in the benchmark S&P 500 over the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After obtaining a master’s degree in economics, she acquired knowledge in equity research and portfolio management at Finlatics. Following…