Bottom-Fishing For Johnson Outdoors, Inc

Is This The Bottom For Johnson Outdoors, Inc Stock 

Johnson Outdoors, Inc NASDAQ: JOUT is a pandemic winner and one that continues to win in the wake of the peak scare. Like many of the other pandemic winners, shares of the stock have been in a notable downtrend since hitting the peak of value earlier in 2021 but that downtrend appears to be ending. The Q4 results prove the company’s strategies are working and that is leading to some interesting price action for the stock. Price action appears to be bottoming and in a way that suggests a strong updraft is beginning to blow. If the market carries through with this activity, we see this stock gaining an easy 10% to 20% by the end of the year or early in 2022. 

Johnson Outdoors, Inc Has Trophy-Quality Quarter 

Johnson Outdoors was expected to maintain the strength gained during the pandemic but not to build on it. The company’s revenue of $166.26 million is up a slim 1.0% from last year and beat the Marketbeat.com analysts consensus for a slight decline. The salient point is that revenue is up more than 57% on a 2-year basis and driven by double-digit gains in most categories. 

On a segment basis, high demand for fishing, camping, and boating equipment has sales up 56% YOY for these categories. Fishing sales are up 23% on high demand across all lines of products while Camping sales are up 52% on demand for tents, sleeping bags, and stoves. The Boating segment is leading the group, however, with a gain of 56% YOY. Diving is the only area of weakness but even it is coming back with a 14% YOY increase in sales. 

The only bad news is that margins are slipping due to supply chain constraints and other systemic challenges like labor cost and availability. That said, efficiencies within the operating and mix helped to offset the shrinkage and deliver margin above expectations. The $0.68 in GAAP earnings is down from last year but beat the consensus by $0.03 or 460 basis points. Last year, earnings were aided by a massive drawdown in inventory that has since been corrected. The company says it is running with above-average inventory in an effort to mitigate supply chain challenges. 

No Guidance From Johnson Outdoors, Inc But … 

Johnson Outdoors, Inc doesn’t give guidance but the company is obviously doing well. Not only are the revenue and earnings above expectations but they are supporting a very healthy dividend. The yield is a bit low at only 1.17% but there is a robust outlook for dividend growth. The company has been increasing the payout for the last 6 years which is one reason, and that last was worth 43% to investors. Another is the rock-solid balance sheet. The company’s cash position is growing despite the inventory build and increased payout and there is no debt to speak of. This means the company has ample room in the cash flow to continue increasing the payout if at a slower rate and to invest in whatever way it needs to improve operations. 

The Technical Outlook: Johnson Outdoors, Inc Confirms Support 

Shares of Johnson Outdoors, Inc opened higher in the wake of the Q4 release and then proceeded to firmly test and confirm support at the $96 level. This support is seen in the price action which formed a nice-looking doji candle and in the indicators which are rolling into a buy signal. Assuming the market follows through with this action we see price action moving up to retest resistance at the short-term EMA. If that can be overcome the price will likely move up to the $110 to $115 region in the very near to short-term.