We believe in driving to the optimum store count in each physical geography that we operate in and optimizing comparable sales within these markets between physical and digital to drive total trade area sales growth. The company appears to receive information from its online business model, which is later used to obtain the optimum store count: In addition, the company has accumulated a lot of know-how thanks to its operations for many years. Under normal conditions, I expect that management will continue to select great strategic locations for its shops. With positive and growing free cash flow and a decrease in the shares outstanding, it seems likely that the stock price will trend north: Let's note that analysts are expecting a significant decrease in the share count from now until 2025. Announces Fiscal 2021 Fourth Quarter Results | Zumiez Inc. We are pleased with our many recent accomplishments and we are excited about the opportunities to profitably expand our global reach in the years to come. In my view, if we see more stock repurchase programs, the demand for the stock will trend north:Īnd in 2021, we further enhanced our shareholder value creation through the repurchase of 4.6 million shares or 18% of our common stock. I wouldn't expect directors to approve such a massive stock repurchase program if they believed that the stock is expensive. The Board of Directors approved the acquisition of 18% of the total share count. I don't seem to be the only analyst who believes that the stock is undervalued. The sector median EV/EBITDA is close to 5x: In my view, the company does seem a bit undervalued at 5.5x 2022 EBITDA. In the light of these figures, I believe that most analysts are optimistic about the company's future developments. They also believe that the company's EBITDA margin will likely stay at around 13%, and the D&A/Sales ratio should not exceed 1.77%. Most analysts are expecting revenue growth to stand at around 4.39% from 2022 to 2025. Repurchase Of Stock And Optimism From Market Analysts This strategy, which requires significant agility in navigating the trend cycles and speed desired by our customer, has produced a 36.1% five-year compound annual growth rate in diluted earnings per share and generated $422 million in free cash flow over the same period. Our multi-year success is directly attributable to the execution of the long-term consumer centric growth strategy the Company has been building and evolving since its inception. According to the most recent quarterly report, this strategy offers rapid changes between trend cycles, and has produced significant compound annual growth in the past: The company's long-term consumer centric growth strategy appears to be one of the business secrets of Zumiez. Keep in mind that even during the pandemic, management opened new stores, and closed a small number of stores: In my view, it is the right time to have a look at the company's business model. The company offers its products both online and in a large network of shops in the United States, Europe, Canada, and Australia: Zumiez: Long-term Consumer Centric Growth Strategyįounded in 1978, Zumiez is a specialty retailer of apparel, footwear, accessories, and hard goods. Yes, I envision some risks, however the upside opportunity in Zumiez's stock price appears larger than the potential downside risks. The company is also acquiring its own stock, which will likely increase the demand for the stock. In my view, if management also invests more in its ecommerce business model, the fair value of the stock would be significantly higher than the current stock price. Even during the pandemic, Zumiez ( NASDAQ: ZUMZ) continued to open new stores thanks to its long-term consumer centric growth strategy.
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