Saucony for Sale?

• Email
• Share
• Print

We've said that Saucony (Nasdaq: SCNYA) (Nasdaq: SCNYB) is focused. We've noted that it's not sexy, that it's a bit of an underdog. We've also mentioned that, despite big gains as a Hidden Gems pick, the stock has room to run. But the firm's penchant for understatement was truly evident late yesterday when management issued a few press releases.

Great revenues and earnings, plus a dividend. And oh, by the way, the whole outfit may be for sale.

Let's review the numbers first. Sales were up 28% over last year's second quarter, hitting $44 million. (And most of the increase is in the U.S., meaning it's a real revenue increase and not just a benefit of the ailing greenback.) Where the rubber meets the pavement, the firm put up 22% earnings growth, coming to $0.45 per share.

Best of all, a 25% increase in order backlog indicates that the good times may continue to roll. The revenue growth is better than that being posted by industry gorilla Nike (NYSE: NKE), even though it markets everything from the world's ugliest basketball shoes to MP3 players. It's much better than the flat revenues rung up by No. 2 Reebok International (NYSE: RBK).

Getting to the sale prospects, it certainly looks as though Saucony would be a welcome, profitable addition to any sports concern. Acquisition-hungryK2 (NYSE: KTO) might be a likely suitor, but you wonder whether Reebok wouldn't have something to gain by swallowing up its smaller rival. It would gain two premium running brands -- Saucony and Hind -- in addition to a line of retro kicks. These are exactly the best growth segments for Reebok, as well.

Even after today's 8% run-up, Saucony still carries a P/E below 14. Given its history of free cash flow, and the way it shares the green with shareholders, it looks as though investors will continue to be rewarded.

Saucony has returned about one beeellion percent -- well, a bit less -- since it was a Hidden Gems pick. Take a risk free trial.

Fool contributor Seth Jayson runs in Mizunos, owns shares of Reebok, but has no position in any other firm mentioned. View his Fool profile here.