Outdoor recreational products company Johnson Outdoors (NASDAQ:JOUT) fell short of the market’s revenue expectations in Q3 CY2024, but sales rose 9.9% year on year to $105.9 million. Its GAAP loss of $3.35 per share was significantly below analysts’ consensus estimates.

Is now the time to buy Johnson Outdoors? Find out by accessing our full research report, it’s free.

“Challenging marketplace conditions and competitive pressures resulted in lower sales and an operating loss for our 2024 fiscal year. In this challenging environment, we invested in resources against our strategic priorities while working hard to drive operational cost savings,” said Helen Johnson-Leipold, Chairman and Chief Executive Officer.

Company Overview

Operating in locations worldwide, Johnson Outdoors (NASDAQ:JOUT) specializes in innovative outdoor recreational products for adventurers worldwide.

Leisure Products

Leisure products cover a wide range of goods in the consumer discretionary sector. Maintaining a strong brand is key to success, and those who differentiate themselves will enjoy customer loyalty and pricing power while those who don’t may find themselves in precarious positions due to the non-essential nature of their offerings.

Sales Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Johnson Outdoors grew its sales at a weak 1.1% compounded annual growth rate. This was below our standards and is a rough starting point for our analysis.

Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Johnson Outdoors’s history shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 10.7% annually.

This quarter, Johnson Outdoors’s revenue grew by 9.9% year on year to $105.9 million, missing Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 6.2% over the next 12 months. Although this projection indicates its newer products and services will spur better top-line performance, it is still below the sector average.

Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.

Cash Is King

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Johnson Outdoors has shown poor cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 2.1%, lousy for a consumer discretionary business.

Key Takeaways from Johnson Outdoors’s Q3 Results

We struggled to find many resounding positives in these results. Its revenue missed significantly and its EPS fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock remained flat at $34.89 immediately after reporting.

Is Johnson Outdoors an attractive investment opportunity at the current price? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.