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Bull Of The Day: Duluth Holding (DLTH)

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Duluth Holding (DLTH - Free Report) is a Zacks Rank #2 (Buy) and it has solid Zacks Style Scores with an A for Value and Momentum as well as a B for Growth.  The composite Style Score is an A.  What’s not to like about A’s?  Well I can tell you the shorts don't like to see that!

They also didn't like the 22% jolt the stock saw yesterday on volume that was about 7x the normal amount.  Let's see why the shorts are covering in this Bull of the Day article.

Description

Duluth Holdings Inc. provides casual wear, workwear and accessories for men and women. The company markets its products under trademarks, trade names and service marks, including Alaskan Hardgear, Armachillo, Ballroom, Bucket Master, Buck Naked, Cab Commander, Crouch Gusset, Dry on the Fly, Duluth Trading Company, Duluthflex, Fire Hose, Longtail T, No Polo Shirt and Wild Boar Mocs. Duluth Holdings Inc. is headquartered in Belleville, Wisconsin.

Earnings History

There earnings history is ok, with two beat and two misses in the last four quarters.  Over that time period the beats were bigger and thus the average positive earnings surprise over the last year is 19.3%.  That is good to see.

The most recent quarterly report showed a strong beat on the topline and that is very encouraging given the current COVID conditions.

Estimate Revisions

The current quarter has seen a dramatic move higher in estimates.  Just 7 days ago, the Zacks Consensus Estimate was calling for a loss of 18 cents for this quarter.  Now the number is a gain of 5 cents.  That is a huge move.

The fiscal year is one month off the calendar year and the estimate for this year has moved from a gain of 11 cents to a gain of 30 cents. 

Next year has also seen a move higher, from 42 cents to 48 cents.  Again, that is what we like to see as not only are estimates moving higher but there is also implied earnings growth here.

It is super important to point out, the big increase in estimates has happened in the last week. That tells me that investors could see a big rally in this name.

Valuation

Retail names were on the outs lately and with a low price and good performance the valuation is looking pretty good.  I see a 25x forward PE, which is a little higher, but a 1.3x book multiple which is pretty low. 

The price to sales multiple is 0.4x which will probably start to move a lot higher as the company continues to see sales increase.

Chart

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