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Clothier Columbia Sportswear (NASDAQ: COLM) surged as much as 14% higher Friday before closing the day up 12.3%.
This being earnings season, you might imagine that Columbia stock's surge Friday had something to do with an earnings report. You'd be right.More From Fool.com
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Thursday evening, after close of trading, Columbia reported its fiscal fourth-quarter and full-year 2016 earnings. For the quarter, sales were up 3% year over year, at $717.4 million, with net income rising 34% in comparison to Q4 2015 -- to $1.20 per share.
Columbia's sales number fell somewhat short of the $756.8 million in revenues that Wall Street had expected it to announce. Happily, the earnings number beat expectations (for $1.10 per share) quite handily.
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Image source: Columbia Sportswear.
Full-year sales inched up only 2%, to $2.38 billion, and full-year profits rose 10%, to $2.72 per share.
As far as guidance goes, Columbia management advised that they are looking to grow that sales number by a further 4% in fiscal 2017, hold profits steady at $2.72 in the worst case -- and grow them only 4%, to $2.82 per share, even in the best-case scenario.
At Columbia's current stock price of just under $60 a share, that works out to a valuation of at least 21.3 times current-year earnings on the company's stock -- and even higher if the company fails to max out earnings. And honestly, with the company coming off a year showing only 10% earnings growth and promising only 4% growth this year -- and with most analysts saying Columbia is unlikely to exceed high-single-digit growth over the next five years -- 21 times earnings seems a pretty steep price to pay for Columbia Sportswear stock today.
If I were an owner, I'd be looking to take advantage of Friday's price spike, and get out of the stock while the going is good.
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Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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