BDE: Bundle Up Your Portfolio With Black Diamond

Black Diamond Inc (BDE) recently reported Q3 earnings data which topped both the Zacks Consensus Earnings and Revenue Estimates.  The reasons behind Black Diamond stock’s 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.

Black Diamond is a “Zacks Rank #1 (Strong Buy)” company and was formerly known as Clarus Corporation. Black Diamond operates as a manufacturer and distributor 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.  Further, Black Diamond 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, fiscal 2014, Q1 2015 and fiscal 2015 to all increase over the past 30 days.  Estimates have risen:  Q4 from 4 cents per share to 10 cents per share, fiscal 2014 from -18 cents per share to -1 cent per share, Q1 2015 from -5 cents per share to -1 cent per share and fiscal 2015 from -1 cent per share to 26 cents per share.

As you can see from the Price and Earnings-per-share Surprise graph, when Black Diamond beats, BDE sees a strong uptick post earnings.

Black Diamond Data

During the quarter, Black Diamond saw growth in many categories; revenue up 24% year over year, adjusted gross margin up 290 basis points year over year and selling, general and administrative expenses was up 6% year over year. Further, current second half guidance is looking for sales between $113 – $118 million, up 15% – 20% year over year, and a nice increase in gross margins between 160-260 basis points.  This would indicate a consistent growth trajectory for Black Diamond 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

This winter and another polar vortex is coming and expected to be just as bad or even worse than last year, already slamming many parts of the U.S.  And it is time to bundle up!

A company, like Black Diamond, 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!

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