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Why Shares of American Outdoor Brands Rose on Thursday

By Lou Whiteman - Mar 19, 2021 at 8:21AM

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The company's results came in much better than expected.

What happened

American Outdoor Brands (AOUT -3.00%) closed Thursday up 12% after the outdoor recreation equipment maker reported better-than-expected quarterly results.

So what

After markets closed Wednesday American Outdoor Brands reported fiscal third-quarter adjusted earnings of $0.82 per share on revenue of $82.6 million. That was well above the consensus estimate of $0.36 in earnings on revenue of $59 million.

Often when you see that sort of a beat relative to expectations, there was a special one-time item driving the performance, but in this case it appears demand for American Outdoor Brands' hunting, fishing, camping, and security products simply was a lot higher than analysts, or the company, had expected.

Outdoor equipment by the side of a mountain trail.

Image source: Getty Images.

The company said growth occurred at nearly all of its 20 brands, with top sellers in each of its areas of focus.

"Net sales across our portfolio of authentic outdoor brands grew by 91%, exceeding our expectations for quarterly net sales and net income," CEO Brian Murphy said in a statement. "In addition, gross margins expanded by 110 basis points to over 45%."

Now what

The company raised its estimates for full-year fiscal 2021 adjusted earnings to $2.08 to $2.15 per share, well ahead of the $1.68 consensus.

Wall Street is impressed, with at least three investment banks raising their price targets on American Outdoor Brands shares on Thursday morning. The company's results make the case for a much higher valuation, and the stock is responding by heading higher.

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