On Wednesday, Citi reaffirmed its positive stance on Amer Sports Inc. (NYSE:AS), maintaining a Buy rating alongside a steady price target of $19.00. The endorsement follows Amer Sports' second-quarter performance, which exceeded expectations, particularly due to the success of its Arc'teryx brand. The company witnessed comprehensive growth across its product lines, sales channels, and geographical regions, which suggests a promising future for the expansion of new stores worldwide.
Arc'teryx's robust second-quarter results were complemented by growth in the Salomon and Wilson brands, reinforcing a brighter forecast for the fiscal year 2024. The company's performance in China was notably strong, with a 54% increase in sales for the quarter, which surpassed the previous quarter's 51% growth. This performance contradicts concerns of a slowdown in China, as Amer Sports continues to leverage its solid market presence and execution in the region.
Management's response to the positive results was to upgrade the fiscal year 2024 sales and earnings per share (EPS) guidance, lifting it from the initial range of $0.30-$0.40 to a new forecast of $0.40-$0.44. The expectation is that Arc'teryx will remain a key driver for sales and EPS growth throughout the year.
Despite the stock's significant 26% rise since August 7, Citi believes that the long-term risk/reward balance for Amer Sports remains favorable, with the stock trading at a forward-looking enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple of approximately 11 times.
In light of these developments, Citi has concluded its 30-day positive catalyst watch, which had been initiated on August 7, due to the substantial appreciation in Amer Sports' share value since that date.
In other recent news, Amer Sports Inc. has reported substantial Q2 growth and raised its 2024 outlook. The company's revenue saw a significant 16% increase to $994 million, driven by a 34% growth in its technical apparel segment. Despite an operating loss of $9 million, Amer Sports' adjusted operating profit rose 40% to $29 million, and the net loss decreased dramatically by 98% to $4 million. The company's CEO, James Zheng, highlighted the strength of their portfolio and market share gains in sports and outdoor markets globally.
In the wake of these positive results, Amer Sports raised its full-year guidance for 2024, anticipating reported revenue growth between 15% and 17%, and an operating margin towards the high-end of 10.5% to 11.0%. For the third quarter, the company expects reported revenue growth of 12% to 13% and an operating margin between 11.0% and 12.0%. These recent developments demonstrate Amer Sports' ability to maintain growth and profitability in a challenging consumer environment.
The company's robust performance exceeded analyst expectations, posting adjusted earnings per share of $0.05, beating estimates for a loss of $0.06 per share. Following these results, Amer Sports raised its full-year 2024 guidance, expecting an adjusted EPS of $0.40-$0.44.
InvestingPro Insights
As Amer Sports Inc. (NYSE:AS) continues to garner attention with its promising performance, particularly with the Arc'teryx brand driving growth, a look at the latest data from InvestingPro provides a nuanced view of the company's financial health and market position. With a market capitalization of $6.89 billion, Amer Sports stands as a significant player in its industry. The company's revenue growth over the last twelve months, as of Q1 2024, stands at an impressive 16.98%, indicating a robust expansion in its business activities.
InvestingPro Tips suggest that Amer Sports is expected to see net income growth this year, which aligns with management's upgraded guidance for the fiscal year 2024. Moreover, the company has demonstrated a significant return over the last week, with a 20.94% price total return, reflecting investor confidence in its recent performance and future prospects. It's also worth noting that Amer Sports does not pay a dividend, which may be relevant for income-focused investors. For a deeper dive into Amer Sports' financials and additional InvestingPro Tips, interested readers can visit the dedicated page on Investing.com.
While the P/E Ratio is currently negative, indicating that the company was not profitable over the last twelve months, analysts predict Amer Sports will be profitable this year. This forward-looking optimism may be a driving force behind the stock's recent price movements. As of now, Amer Sports is trading at a Price / Book ratio of 1.71, suggesting that the market values the company at a level reasonably close to its book value. With these insights in mind, investors can better gauge the opportunities and risks associated with Amer Sports as it navigates through the fiscal year.
For additional context and to stay ahead with more advanced analytics, there are currently 5 more InvestingPro Tips available for Amer Sports, which can provide investors with a more comprehensive understanding of the company's financial position and market potential.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.