RAZRWire comes on the heels of the company's previous innovation, the Oakley Thump. No, the Thump is not a new dance sweeping the club scene. It's a product that is smartly tapping into the amazing portable music player success led by Apple's
But it's one thing to design new high-tech, slim-and-shady eyewear so you can bounce to the beat of Slim Shady's latest hits; it's a completely different thing to translate "cool" into cash. Let's take a look at Oakley's latest quarterly highlights to see whether it is connecting the cool-to-cash dots.
The company attributed a significant portion of its fourth-quarter comparable same-store sale growth to the successful contributions of its Thump eyewear line. As a result, Oakley produced strong sales of $153 million -- a 24.5% increase compared with the same period a year ago. Likewise, its net income climbed 213% to $10 million.
Its successful quarter capped off annual 2004 revenues that reached $585.5 million -- a 10.9% year-over-year increase. The company's earnings for the year grew 8.9% to $41.6 million (or $0.60 in earnings per share).
While its sales and earnings are increasing, unfortunately the same cannot be said of Oakley's operating margins. For 2004, those margins slipped to 9% from the 9.4% in 2003. As expected, slim margins are contributing to minuscule year-over-year improvement in its structural free cash flow (SFCF).
Challenging profit margin growth is one hurdle a prospective investor faces, but it's not the only one. At a price of about $13, its stock currently bears a price-to-earnings ratio of 22. With the company's guidance of 10% to 15% growth for 2005, its stock carries a steep price tag at the current level.
This is a good time to practice patience. This Fool's opinion: Be cool in your Oakley techno shades, and wait for a better deal before buying.
Fool contributor Jeremy MacNealy does not own shares in any of the companies mentioned.