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On Wednesday, Seaport Global Securities maintained its Neutral stance on shares of Zumiez Inc . (NASDAQ:ZUMZ) ahead of the company's second-quarter financial report, set to be released on September 5, 2024. The firm's analysis suggested that Zumiez's same-store sales (SSS) were tracking better for the second quarter to date (2Q24td) than in the first quarter of 2024 (1Q24), including sequential improvements in North America and other international markets.
Zumiez had provided a sales range for the second quarter that indicated slightly stronger growth than what was seen in the first four weeks of the quarter. However, when adjusting for the calendar shift, the guidance appeared conservative, signaling less anticipated growth over the remainder of the quarter. According to data from Bloomberg Second Measure, Zumiez's sales growth for 2Q24 on a 4-5-4 calendar basis surpassed that of 1Q24.
The report by Seaport Global Securities highlighted that the second quarter began slowly for Zumiez, which continued for most of the quarter, but ended on a strong note with the start of the back-to-school season.
This momentum has reportedly carried into the early third quarter of 2024 (3Q24). While Zumiez has not provided specific guidance for the full fiscal year 2024 (FY24), the company is optimistic about its ability to grow sales and product margins, as well as leverage selling, general and administrative expenses (SG&A).
The firm is modeling Zumiez's second-quarter performance at the high end of the company's plan, suggesting that the actual results could be even better. Zumiez is also expected to be on track for sales growth and a return to positive operating margin (OM) in FY24.
Despite these positive indicators, Seaport Global Securities stated that it is challenging to adopt a more constructive view on Zumiez's stock at current levels. To consider a Buy rating, the firm indicated that a price target of at least $33 and fiscal year 2026 (FY26) earnings per share (EPS) of nearly $2 would be required, thresholds that have not yet been reached.
In other recent news, Zumiez Inc. has exhibited a robust performance in its recent financial reports. The company's second-quarter sales showed sequential improvement, particularly in North America and other international markets, according to Seaport Global Securities.
This trend has continued into the early third quarter, with the company's sales surpassing the first quarter's growth on a 4-5-4 calendar basis. Zumiez has also expressed confidence in its ability to grow sales and product margins for the fiscal year 2024.
In an analysis by Jefferies, the firm maintained its Hold rating on Zumiez but increased the company's stock price target due to the company's strong performance in both revenue and earnings. Despite the positive trends, Zumiez has projected its second-quarter earnings per share (EPS) to fall below analysts' expectations.
B.Riley also maintained a Neutral rating on Zumiez shares, raising the price target following the company's first-quarter earnings report which surpassed consensus expectations on sales, adjusted EBITDA, and adjusted EPS. The company reported a slight year-over-year decrease in total sales for the first quarter of fiscal 2024, reaching $177 million, a 3% dip compared to the previous year. However, Zumiez's sales and earnings per share outperformed their own high-end guidance.
InvestingPro Insights
As Zumiez Inc. (NASDAQ:ZUMZ) approaches its second-quarter financial report, recent data from InvestingPro provides a nuanced picture of the company's performance and stock valuation. With a market capitalization of approximately $573.77 million, Zumiez is navigating a challenging retail environment. The company's P/E ratio stands at -9.02, reflecting investor concerns about profitability, as echoed by the recent downward revisions of earnings by two analysts. Despite this, Zumiez has experienced strong returns over the past year, with a one-year price total return of 60.25%, indicating a significant uptick in investor sentiment.
InvestingPro Tips highlight that the stock is currently in overbought territory according to the RSI, suggesting that caution may be warranted for potential investors. Moreover, Zumiez is trading near its 52-week high, with the price at 96.26% of this peak. The company's liquid assets exceeding short-term obligations and a moderate level of debt provide some financial stability, which may reassure investors looking at the company's fundamentals.
For those interested in a deeper dive into Zumiez's financial health and stock performance, InvestingPro offers additional insights. There are 12 more InvestingPro Tips available, which include predictions on profitability and dividend policies, providing a comprehensive analysis for informed investment decisions. To explore these further, visit https://www.investing.com/pro/ZUMZ.
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