Please ensure Javascript is enabled for purposes of website accessibility

Why Columbia Sportswear Stock Rose 19% in February

By Reuben Gregg Brewer - Mar 3, 2021 at 10:06AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The clothing maker reported rough earnings, but investors weren't thinking about the past when they read the quarterly update.

What happened

Shares of clothing maker Columbia Sportswear (COLM 2.77%) jumped 19% in February according to data from S&P Global Market Intelligence. There was a notable price increase early in the month, with the gains holding through to the end. It was all about earnings, sort of.

So what

Columbia Sportswear's fourth-quarter 2020 sales decreased 4% year over year, which isn't too bad given the coronavirus pandemic backdrop. Online sales increased a hefty 41%, though that was clearly offset by declines in brick-and-mortar stores, as you would expect. The earnings picture wasn't nearly as sanguine, however, with a 14% year-over-year drop in the quarter. Still, the quarter was pretty solid given the environment at hand.  

Three women shopping for coats.

Image source: Getty Images.

That might have gotten investors into a buying mood, but it was more likely the outlook here that really did it. For starters, investors were primed for this update, given that Columbia Sportswear announced it was reinstating its dividend at the pre-COVID level of $0.26 per share in late January. And the company didn't disappoint when earnings were reported, with management looking for a sales increase of 18% to 20% year over year in 2021. On the bottom line, it is projecting earnings of $3.75 per share to $4.05, up from the full-year 2020 tally of just $1.63. Although the 2021 projection is below the 2019 level, it would be a huge improvement from 2020 and suggests that this sportswear company's business is getting back to normal.  

Now what

Columbia Sportswear is clearly telegraphing material business improvement in the quarters ahead. That would, indeed, be nice to see, but long-term investors should still monitor the name closely to make sure it can live up to those projections. The stock price is back to where it was prior to the start of the pandemic, so investors are pricing in a recovery that really hasn't shown up in the numbers just yet.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Columbia Sportswear Company Stock Quote
Columbia Sportswear Company
$75.72 (2.77%) $2.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.