Through The Fly's Eyes: Oakley
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
High Tech Fashion Statements For Your Eyes
It's unusual for a product to offer high performance, high fashion and safety, all at once. There is an eyewear outfit in Foothill Ranch, California that manages the trifecta.
Oakley, Inc. (OO) makes high-performance goggles and sunglasses for the sports and fashion sunglasses markets. The firm's brand portfolio includes the Dragon, Eye Safety Systems, Fox Racing, Mosley Tribes, Oliver Peoples, and Paul Smith Spectacles lines. Beyond its wholesale operations, Oakley operates about 220 of its own retail shops, including Oakley Stores, The Optical Shop of Aspen, and Sunglass Icon. The company also offers a wide selection of Oakley-branded apparel, footwear, watches and accessories. Competitors include Luxottica Group (LUX) and Nike (NKE).
Oakley pleased investors earlier in the month, when it reported Q1 EPS of eight cents and revenues of $199.2 million. Analysts had been looking for three cents and $182.7 million. Management also guided FY07 EPS to 95-98 cents, versus Street consensus of 96 cents. The CEO attributed the good quarter to growth of its retail endeavor, contributions from acquisitions and the successful implementation of process changes that allowed earlier shipment of the spring 2007 product. The stock popped on the news and then passed into a bullish "flag" consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.
Brokers recommend the issue with one "strong buy," one "buy" and eight "holds." Analysts see a 19% growth rate, through the next year. The OO Price to Sales ratio (2.09), Sales Growth rate (31.29%) and EPS Growth rate (100.00%) compare favorably with industry, sector and S&P 500 averages.
Institutional investors hold about 36% of the outstanding shares. Over the past 52 weeks, the stock has traded between $14.86 and $25.50. A stop-loss of $21.25 looks good here.