Kathmandu (OTCMKTS:KTHDY) is an outdoor apparel company from New Zealand that has built up a significant retail presence throughout Australasia following a similar business model to The North Face, Columbia Sportswear and Patagonia.
The company had problems a few years ago with international expansion so had to pull back to focus on Australia and New Zealand.
At the time (2014) the stock price and earnings fell sharply but have since recovered well. Over the past 2 years earnings have increased 90% and the stock price is up about 66%. In the most recent (year end July) report, growth has slowed but remained healthy. Revenue growth was 5.8%, same store sales grew 5.6% and net income was up 13.5%.
Despite the healthy results, the company still has a very attractive trailing PE of 13 and forward PE of 11.
Additionally debt has been almost completely paid down which, along with growing profits, has allowed the company to boost the dividend to a yield of 5.5% and with a payout ratio of just 50% it looks fairly safe.
At these levels the company looks healthy and the stock looks cheap on almost any comparative. The most remarkable comparison however is to other outdoor apparel companies such as VFC or COLM who trade on a multiple of 20 or 30 times trailing earnings. We are talking about powerful lifestyle brands here that command healthy margins and strong defendable moat against ecommerce. North Face and Columbia Sportswear may be significantly larger but Kathmandu has a strong leading position in its home markets and chunky margins. It wouldn’t be hard to imagine this stock doubling.
For those who want to read more theres an excellent article in SeekingAlpha by “Timberwolf Equity Research”.
For the record, I have no connection to the article, the author or to Seeking Alpha. I don’t own the stock. I am not being paid to write this. I am not a bot.
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Submitted November 04, 2017 at 01:32PM by InterestingNews1 http://ift.tt/2hbbDXA
