This company, which primarily design, manufacture, and market outdoor recreation products and equipment focusing on shooting ammunition and firearms and hydration, has been grouped into sport shooting and recreation sector in sport goods industry.
It seems that the demand for sports firearm and ammunition has been weak and declining quickly in the past three years as indicated by the significant decline in both price and volume of related products according to typical company in this sector. While unfavorable retail industry can help explain for the large decrease, political reason and public realization may play more important role here.
As revenue and sale volume decline, profitability of companies in this sector shrinks as well. A typical gross margin was down to 23%%, the SG&A as percentage of sales was up to about 18%, and the operating margin was down to about 3% in 2018. And the EBI/sales was about 1.9% in 2018.
It seems that the demand for firearm and ammunition of this company has been weak and significantly declining since 2016 as indicated by the decline in revenue of those products in 2017(down by 16%) and 2016 (2%) as a result of decline in both price and volume. Other outdoor recreation good has also experienced decrease during the same period of time.
The fiscal 2018 compared with the 2017 (ended mar 31 2018)
Net revenue decreased about 9.5%.
Ammunition and firearm revenue decreased about 16% due to decrease in both price and volume of ammunition products and lower demand for firearm.
Fiscal 2017 compared with fiscal 2016
Net revenue (excluding acquisition) decreased about 6.5%.
Ammunition and firearm revenue decreased about 2.3% due to decrease in ammunition sales.
Fiscal 2016 compared with fiscal 2015
Net revenue (excluding acquisition) increased about 3%.
Ammunition and firearm revenue increased about 4% due to increase in firearm and ammunition sales volume.
Its gross margin was down from about 27% to about 22%. With the increased SG&A as percentage of sales (up to about 18% in 2018), we have been decreased operating margin (down to 3% currently).
Stock performance
This company is having an enterprise price/EBI ratio of 43. We think that its stock was relatively overvalued COMPARED similar sport good manufacturers - Callaway Golf Company unless it can be justified by the potential growth in revenue as indicated by retailers.
