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Bull of the Day: Black Diamond (BDE)


Black Diamond (NASDAQ:BDE) recently reported Q3 earnings data which topped both the Zacks Consensus Earnings and Revenue Estimates.  The reasons behind the beats were solid reorders for the Black Diamond spring/summer product, the POC and Black Diamond brands, and the POC Road line.  The strength of these lines helped propel Black Diamond’s revenues up 24% year over year.

This Zacks Rank #1 (Strong Buy) company was formerly known as Clarus Corporation, operates as a manufacturer and distributer of outdoor recreation and equipment and active lifestyle products.  Black Diamond’s products range from rock-climbing equipment, technical and high end backpacks, headlights and lanterns, gloves and mittens, tents, skis, ski products, and avalanche safety equipment.  

Earnings Results and Forward Expectations

Black Diamond posted solid Q3 earnings data, beating the Zacks Consensus Earnings Estimate by a whopping 1200%, and beat the Zacks Consensus Revenue Estimate by $1 million dollars.  Further, the company has beaten the Zacks Earnings Estimates in three out of the four previous quarters with an average positive earnings surprise of 553.13%.  

These solid consistent numbers has caused the Zacks Earnings Estimates for Q4, FY 2014, Q1 2015, and FY 2015 to all increase over the past 30 days.  Estimates have risen:  Q4 from $0.04 to $0.10, FY 2014 from -$0.18 to -$0.01, Q1 2015 from -$0.05 to -$0.01, and FY 2015 from -$0.01 to $0.26.  

As you can see from the Price and EPS Surprise graph, when Black Diamond beats they see a strong uptick post earnings.  

Company Data

During the quarter, Black Diamond saw growth in many categories; Revenue up 24% y/y, Adjusted gross margin up 290 bp y/y, and SG&A was up 6% y/y.  Further, current second half guidance is looking for sales between $113-$118 million, up 15%-20% y/y, and a nice increase in gross margins between 160-260 bp.  This would indicate a consistent growth trajectory for the company going forward.

On a quarterly basis, Black Diamond was able to increase net margins by 9.9%, while decreasing Total debt to total capital by 7.5%, Total debt to total equity by 9.9%, and Total asset to Common equity by 8.2%.  

Bottom Line

As the House Stark family motto states, ‘Winter is Coming’, and with another polar vortex, which is expected to be just as bad or even worse than last year, now slamming many parts of the U.S., winter has come. And it is time to bundle up!

A company that sells avalanche gear, skis, gloves, and other outside items would be greatly benefited by a cold snowy winter. So bundle up for a strong winter with Black Diamond Inc!

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