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Why Sportsman's Warehouse Holdings Stock Jumped 8% Today

By Rich Smith - Aug 23, 2018 at 2:23PM

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Earnings appear to beat estimates -- even if they didn't grow at all.

What happened

Sportsman's Warehouse Holdings (SPWH 3.78%) reported earnings for its fiscal Q2 2018 this morning, and it seems investors liked what they had to say. Shares of the Midvale, Utah-based retailer of outdoor products are up 8.9% as of 2 p.m. EDT on news that it beat analyst earnings estimates last quarter.

Sportsman's Warehouse said it earned $0.18 per share "adjusted" for one-time items, three cents ahead of consensus estimates. Sales of $203.3 million likewise eked out a beat relative to Wall Street's expected $202.1 million.

Cartoon figure with a pointer, next to a large red arrow going up

Sportsman's Warehouse earnings didn't rise at all, but there's still a reason the stock is going up. Image source: Getty Images.

So what

But does Sportsman's Warehouse stock deserve such a rich reward? After all, when calculated according to GAAP accounting standards, the company actually only earned $0.15 per share in Q2. That was flat against last year's Q2 earnings, despite sales growing 6% year over year.

On the other hand, at least Sportsman's Warehouse earned a profit this time around. In Q1, it didn't; the company reported a $0.14-per-share loss, which was $0.03 worse than the loss that it incurred in Q1 of 2017. By that measure, at least, Q2's results were an improvement.

Now what

Things should keep on improving as the year progresses. Management guided investors to expect between $220 million and $228 million in sales for Q3, a 3% increase in sales at the midpoint of guidance. "Adjusted" earnings are expected to range from $0.24 to $0.27 per share -- more than the company earned in this year's Q2, and potentially more than the $0.23 per share (GAAP) that it earned in last year's Q3.

For the year, management forecasts sales between $841 million and $857 million (about a 5% improvement year over year), with earnings between $0.57 and $0.63 -- also "adjusted."

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