Shares of outdoor sporting goods retailer Sportsman's Warehouse Holdings (NASDAQ:SPWH) are down 10.2% as of 12:45 p.m. EDT.
Sportsman's Warehouse reported its Q4 and full-year earnings last night. For the quarter, the company earned $0.25 per share on sales of $221.4 million. Although sales were up 6% year over year, profits declined 7%. Both sales and earnings also fell short of analyst expectations, which had called for earnings of $0.27 on sales of $228.7 million.
For the full year, Sportsman's Warehouse earned $0.70 per share on sales of $780 million.
It gets worse. Management guided investors to expect earnings of only $0.60 to $0.68 per share this year, a drop of as much as 14%. That prediction was all the more surprising given that it expects to grow its sales by as much as 8% -- to between $825 million and $845 million.
What does this mean for investors? Well, after today's sell-off, Sportsman's Warehouse carries a market capitalization of $190 million and a share price of $4.52. At the midpoint of this year's guidance range, that works out to a P/E ratio of only 7.1 -- which seems pretty cheap, all the more so when you notice that analysts surveyed by S&P Global Market Intelligence are still calling for long-term earnings growth of 13% annualized over the next five years.
But here's the thing: That growth rate is predicated on old data calling for earnings of, for example, $0.70 in 2017 -- and now Sportsman's Warehouse is telling us there's no way it expects to earn anything like $0.70 this year.
Long story short: Don't believe that published growth estimate. This stock is more a "short" than a "long."