Though primarily a clothing retailer for the skateboard and surfer crowd, Quiksilver (NASDAQ:ZQK) has branched out into skiing hardware with its Rossignol acquisition, which also brought Cleveland Golf with it. I mean, like, "Fore!" dude. The retailer will be reporting fourth-quarter and end-of-year results on Thursday. Here's what people are saying on the down low.

What analysts say:

  • Buy, sell, or waffle? The 17 analysts that cover Quiksilver generally give it a thumbs-up. Ten of them say it's a buy or strong buy, and seven think you should hold tight. No one is recommending a sell.
  • Revenues. For the fourth quarter, revenues are expected to land in the $747 million range, while full-year sales should be $2.3 billion, a 17% and 30% increase, respectively.
  • Earnings. Profits for the quarter are expected to nearly double, coming in at $0.51 per share, up from the $0.27 reported last year, while full-year earnings are actually expected to be lower at $0.73, down from the $0.86 per share posted last year.

What management says:
Quiksilver's core business has been running true to form, turning in strong results. Its board-sports brands, including Quiksilver, Roxy, and DC Shoes, were quite popular during the summer months -- no surprise there. Rossignol, of course, being a winter-sports brand, had been dragging down performance. So did Cleveland Golf, which should have had a better time of it. But the golfing market in general is relatively flat, with the number of rounds of golf played not gaining ground this year, and the fourth quarter should be a slow one for that division.

Rossignol, however, should continue to provide a boost to the company this quarter, along with the first quarter next year. Sales of ski equipment helped revenues jump 84% in last year's fourth quarter in the Americas, and more than double in Europe. 2005 was the first time Quiksilver had Rossignol contributing to its results, so the comparisons from 2004 were significant. Now, after its first full year as part of the consolidated business, the comparisons won't be so dramatic.

What management does:
In addition to the drag that Rossignol has played on sales, particularly during the warmer-weather months, it's also hurt the company's profit margins. Quiksilver doesn't foresee that changing anytime soon. Skiing is as competitive an industry as it is a sport, and trying to stay ahead of the competition is a pricey and only marginally profitable endeavor.

Margin %

07/05

10/05

01/06

04/06

07/06

Gross

46.1%

45.4%

45.7%

45.7%

45.9%

Op.

10.6%

10.2%

9.9%

8.3%

6.9%

Net

6.6%

6%

5.6%

3.9%

2.8%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
It was expected from the time of their acquisition that it would take a while for Quicksilver to digest Rossignol and Cleveland Golf. However, the skateboard, snowboard, and clothing lines are still exceptionally strong brands, enjoying wide distribution beyond the company's own retail stores. With the continued popularity of PacSun (NASDAQ:PSUN) and Zumiez (NASDAQ:ZUMZ) as teen retailers that cater to the surf-and-skate crowd, Quiksilver is still on a smooth downhill run. That probably explains why its recent stock chart resembles the ascending slope of a black-diamond trail.

Competitors:

  • K2 (NYSE:KTO)
  • Volcom (NASDAQ:VLCM)

Related Foolishness:

Volcom and Zumiez are recommendations of Motley Fool Hidden Gems . PacSun is a recommendation of Motley Fool Stock Advisor . Whatever your investing style, you can hit the slopes with a Motley Fool newsletter designed for you!

Fool contributor Rich Duprey owns shares of K2, but does not own any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.