Investors weren't too stoked about Volcom's
Third-quarter net income fell 18.4%, to $13.3 million, or $0.54 per share. Revenue dropped almost 16%, to $93.9 million. On a more positive note, quarterly gross margin ticked up a bit to 51.6%, from 49.4% this time last year. Spending less on promotional activity worldwide allowed the company to better maintain prices.
Need a serious thrill? Volcom beat analysts' expectations for third-quarter earnings of $0.37 per share by a long shot. Less excitingly, Volcom gave a fourth-quarter forecast of earnings of $0.01 to $0.04 per share, well below analysts' previous expectations for $0.11 per share.
Volcom still faces what could be a very difficult holiday season for the retailers and consumer-goods companies to whom it supplies most of its board-sports-related merchandise, including Zumiez
With its seemingly authentic appeal, Volcom seems like a more attractive prospect than retailers such as Abercrombie & Fitch
In contrast, investors who bought Volcom shares back in March have enjoyed some totally radical gains. The rally has driven shares into admittedly pricey-looking territory, relative to competitors.
Company |
Trailing P/E |
Forward P/E |
Projected 5-Year Annual Growth Rate |
---|---|---|---|
Volcom |
26 |
19 |
20% |
Aeropostale |
14 |
11 |
15% |
Buckle |
12 |
11 |
12% |
Data from Yahoo! Finance, as of Nov. 2.
With our overall economic future so uncertain, I'm not inclined to take analysts' projections of any company's future growth as gospel. Even their rosy forecasts for Volcom might prove too optimistic.
I don't think there's any reason for long-term Volcom shareholders to cut and run; I like the company for the long term. However, given its current challenges and its lofty price, I think interested investors might be best off waiting for a more appealing entry point. Premium-priced stocks can sometimes deliver flaming wipeouts if their growth disappoints, and the difficult holiday season ahead may force Volcom shares into cheaper territory.
What do you think of the board-sports brand's prospects: gnarly or bogus? Please let us know in the comment boxes below.
Grab your board and skate along with some related Foolishness:
- Last quarter, Volcom was still riding fakie.
- One Fool gave three reasons not to miss the Volcom boat.