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Summary

  • SPWH is an outdoor sporting goods retailer with principle offices in Midvale, Utah.
  • SPWH plans to raise $150.0 million in its upcoming IPO, aiming for a market value of $510 million.
  • We rate SPWH a Buy if it prices at the lower end of the proposed range or lower, given its consistent profits and expansion, strong leadership, and strong underwriters.

Sportsman's Warehouse Holdings Inc. (NASDAQ:SPWH), an outdoor sporting goods retailer with principle offices in Midvale, Utah, plans to raise $150.0 million in its upcoming IPO.

The firm will offer 12.5 million shares at an expected price range of $11-$13 per share. If the IPO can reach the midpoint of that range at $12 per share, SPWH will command a market value of $510 million.

SPWH filed on March 7, 2014.

Lead Underwriters: Credit Suisse Securities LLC, Goldman Sachs & Co.

Underwriters: D.A. Davidson and Co., Piper Jaffray & Co., Robert W Baird & Co. Incorporated, Wells Fargo Securities LLC, William Blair and Co. LLC

Summary

SPWH is an outdoor sporting goods retailer offering hunting, fishing, shooting and camping gear.

The firm operates 49 stores spread across 18 states; stores average 48,000 gross square feet. SPWH believes that its minimalist store layout allows it to expand efficiently and with less initial cost outlay.

The firm attempts to customize its offerings to the local environment, and markets itself through its knowledgeable staff and in-store events and educational programming.

Valuation

SPWH offers the following figures in its S-1 balance sheet for the fiscal year ended February 1, 2014:

Revenue: $643,163,000.00

Net Income: $21,750,000.00

Total Assets: $224,229,000.00

Total Liabilities: $345,325,000.00

Stockholders' Equity: ($121,096,000.00)

SPWH has seen strong expansion in sales in recent years. Net sales for fiscal 2013 totaled $643.2 million, representing a compound annual growth rate of 30.7% from fiscal 2011's net sales of $376.6 million.

Strong Competition

SPWH competes with other specialty retailer and sporting goods stores along with mass merchandisers and online retailers, some of which have access to far greater financial resources than SPWH. Competitors include Academy Sports + Outdoors, Dick's Sporting Goods (NYSE:DKS), Wal-Mart (NYSE:WMT), Target (NYSE:TGT), and Amazon (NASDAQ:AMZN).

Management Highlights

President and CEO John V. Schaefer has served in his current positions since August 2009. He previously served as CEO of Team Express and as CEO and Chief Restructuring Officer of Pierre Foods. Mr. Schaefer also worked as Managing Director of Lightning Management, LLC, and held various executive positions with Cornerstone Brands, Inc. Mr. Schaefer holds a BBA in Business Administration from the University of Wisconsin.

Sharpshooter Investors Should Zero In on SPWH

We rate SPWH a buy if it prices at the lower end of the proposed range or lower.

The firm is turning a profit consistently. Despite somewhat high debt levels, we believe SPWH's impressive growth in sales (noted above, 30% from fiscal 2011 through fiscal 2013), along with its low-cost locations, should allow the company to continue to expand without losing much in the eyes of its clientele.

SPWH's focus on creating connections with its customers through events has also proven successful thus far.

The firm's experienced leadership team should be able to effectively manage its robust recent growth, and SPWH's very strong underwriters will likely offer additional support.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SPWH over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: Sportsman's Warehouse IPO A Potential Target For Investors