On Thursday, CFRA maintained its Hold rating on Canada Goose (NYSE:GOOS) with a steady price target of $12.00. The firm's valuation is based on a forward price-to-earnings (P/E) multiple of 14.3 times the projected earnings per share (EPS) for the fiscal year ending March 2025 (FY 25). This multiple is lower than the company's two-year average forward P/E multiple of 18.5 times. The decision reflects concerns about margin pressure due to less robust growth prospects and a deceleration in brand momentum.
CFRA has left its EPS forecast for FY 25 unchanged at CAD1.15 (USD0.84) and has introduced an EPS estimate for FY 26 at CAD1.30 (USD0.95). Canada Goose recently reported normalized fourth-quarter EPS of CAD0.19, surpassing the CAD0.14 consensus estimate by CAD0.13. The company's revenue for the quarter was CAD358 million, exceeding expectations by CAD42 million.
The breakdown of Canada Goose's fourth-quarter performance showed a 19% year-over-year increase in direct-to-consumer (DTC) revenues, while wholesale revenues saw a 9% decline. The quarter's gross margin saw a modest improvement, rising 20 basis points year-over-year to 65.1%. However, selling, general, and administrative (SG&A) expenses increased to CAD210 million from CAD173 million.
Looking ahead, Canada Goose has provided guidance for low-single-digit revenue growth and mid-teen growth for adjusted EPS in FY 25. The company also reported that it continues to generate 70% of its revenues from direct-to-consumer channels. CFRA's reiteration of the Hold rating suggests that the firm believes the current stock valuation fairly represents Canada Goose's growth trajectory.
InvestingPro Insights
With Canada Goose's (NYSE:GOOS) recent performance and future prospects in focus, InvestingPro offers additional insights that may be valuable for investors considering the company's stock. According to InvestingPro, management has been proactive in repurchasing shares, which could signify confidence in the company's value. Additionally, Canada Goose boasts impressive gross profit margins, with real-time data showing a gross profit margin of 68.93% for the last twelve months as of Q3 2024.
InvestingPro Data indicates a market capitalization of 1,280M USD, with a P/E ratio currently standing at 36.7. This is notably higher than the forward P/E multiple of 14.3 times projected by CFRA for FY 25, which could suggest that the stock is trading at a premium based on recent earnings. Despite this, analysts predict profitability for the current year, and the company has been profitable over the last twelve months. It's also noteworthy that the company's liquid assets exceed its short-term obligations, indicating financial stability.
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