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Columbia Sportswear Worth Trying On

The second quarter is usually a slow one for Columbia Sportswear (Nasdaq: COLM  ) , as it is stuck in the middle between the ultra-important spring selling and the also-significant fall and winter period. However, management did its best to liven things up by boosting its expectations for the balance of the year and declaring a $0.14 dividend.

Strong international sales helped to counteract the negative domestic growth that resulted from higher than expected order cancellations in the U.S.' challenging retail market. Both the sportswear category and Sorel brand contributed solid growth, posting 11% and 28% increases, respectively. However, the outerwear segment and Montrail brand didn't fare so well, and both dropped 8%. The end result was a modest 3% increase in total sales, though successful cost-cutting moves led to a doubling of diluted earnings.

Management expects the strong bottom-line trends to continue, as it upped fiscal 2007 guidance to $3.69, placing the forward P/E at just over 17. While that's a reasonable multiple in the consumer goods world, archrival Nike (NYSE: NKE  ) is trading at under 15 times forward expectations.

A P/E multiple is clearly only one of many metrics with which to compare firms. Nike and Columbia actually share many other aspects, including Oregon-based headquarters, a similar product focus, though Columbia is less geared toward footwear, strong cash flow generation, and stable businesses with appealing growth potential.

Other direct competitors of Columbia include privately held Patagonia and North Face, which is owned by VF Corporation (NYSE: VFC  ) , Quiksilver (NYSE: ZQK  ) , and UnderArmour (NYSE: UA  ) . Overall, few can match Columbia's stable approach to growing its business, and it and Nike have had the highest performing stock prices over the past year. I don't know if I would give Columbia Sportswear the edge over its cross-town rival, but it definitely is worth taking home -- if the price is right.

For related Foolishness:

What made Columbia the right fit for Tom Gardner and Bill Mann'sMotley Fool Hidden Gems? Why is UnderArmour a rule-breaking growth pick by Dave Gardner? See for yourself with a free 30-day trial subscription.

Fool contributor Ryan Fuhrmann is long shares of Nike but has no financial interest in any other company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.

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