In the bloodbath that was today's market, Zumiez
Fourth-quarter net income for the board-sports-related retailer increased 10.3% to $12.4 million, or $0.42 per share. Total sales increased 12.7% to $126.6 million. And same-store sales for the quarter jumped 4%, compared with a 12% surge in the same period last year.
Despite Zumiez's admission of a difficult near term, investors responded optimistically to the company's report, probably because it guided for a profitable 2008. The Motley Fool Hidden Gems recommendation said it will earn $0.90 to $0.93 per share in 2008, with comps expected either to be flat or to increase by the low single digits. And of course, the fourth-quarter results also beat analysts' expectations.
Furthermore, Zumiez has gotten dragged down in the undertow lately. Like one of its suppliers, fellow Hidden Gems pick Volcom
I prefer Zumiez to rivals Pacific Sunwear
On the other hand, I prefer Volcom to Zumiez, since Volcom does such a good job of creating an authentic brand, supported by initiatives such as musical acts, concerts, films, and board-sports competitions, all of which I believe help carve a moat around its brand as being "the real deal." Still, both look cheap for high-growth companies, even if things will be tough in the near term -- both have PEG ratios well below the key 1.0 threshold, for example.
Any investor with a long-term timeframe and a belief that the board-sports lifestyle will continue to grow in popularity might want to consider stepping on board, despite the near-term angst.
Catch up on Zumiez's wild ride over the past couple of months: