Vista Outdoor Inc. (VSTO) delivered a blowout first quarter, driven by sales of higher margin product mix in both its segments. Shares jumped 5.7%, closing at $40.39 on July 30.
The company reported adjusted earnings of $1.74 per share, increasing a whopping 241.2% compared to the prior-year period and beating the analysts’ estimate of $0.90 per share.
Additionally, sales climbed 38% to $662.91 million, outpacing the Street’s estimate of $615.6 million.
Compared to the year-ago period, the company’s Shooting Sports and Outdoor Products segments recorded revenue growth of 39% and 38% respectively. (See Vista Outdoor stock charts on TipRanks)
Reacting to the results, Chris Metz, the company’s CEO, said, “Fiscal year 2022 is off to a terrific start with our fourth consecutive quarter of record performance due to strong demand, great execution, and a powerhouse line up of innovative outdoor products.”
During the quarter, Vista completed the acquisitions of QuietKat, Venor, HEVI-Shot, and Remington, all of which are included in its forecasted financials.
For the second quarter of FY2022, the company projects sales and adjusted earnings to be in the range of $710-$730 million and $1.70-$1.80 per share respectively.
Meanwhile, the Street estimates for sales and earnings are pegged at $626 million and $0.92 per share respectively.
Following the results, B.Riley Financial analyst Eric Wold reiterated a Buy rating on the stock with a price target of $63, implying 56% upside potential.
Wold believes the company is well-positioned to gain from the increased demand for outdoor activities and its shooting sports participation base, as more people were attracted to it during the pandemic.
Wold added, “We believe the potential annuity-like revenue stream that participation base provides combined with lean channel inventories for ammunition provides an attractive set-up throughout 2022—and that is evident by the impressive 2Q22 guidance upside.”
Based on 9 unanimous Buys, the stock commands a Strong Buy consensus rating. The average Vista Outdoor price target of $51.56 implies 27.7% upside potential to current levels. Shares have gained 121.8% over the past year.
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