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Summary

  • Rocky Brands posted a solid 2Q quarter beating Wall Street consensus.
  • This is on track with where we saw the company headed.
  • There’s still plenty of upside left thanks to the added benefits of its Creative Recreation acquisition.

Rocky Brands (NASDAQ:RCKY) posted earnings last week that beat both the top and bottom lines. Shares jumped over 4%, however, they've since tapered off. Earnings for 2Q came in at $0.20 a share (versus consensus of $0.19), and revenue came in at $68.8 million (topping $65.8 million consensus). Rocky Brands pointed to its success in wholesale categories and military segment.

Since we covered Rocky back in March shares are up 10%. But we're still around 50% away from our $22 price target. Back then we noted the Creative Recreation acquisition as a big step in diversifying its revenues. It's a lifestyle brand that makes up less than 5% of sales. Management notes that a key focus for the second half of the year will be capitalizing on opportunities in the casual footwear market with Creative Recreation.

We noted:

The brand [Creative Recreation] has little overlap with Rocky's current brands. Rocky may have well gotten Creative at a discount too, as the brand has been depressed for almost two years, with its supply chain issues...Creative has a number of commitments from major retailers that should help boost Creative revenues. This includes Nordstrom, Urban Outfitters and The Buckle Tote. Creative Recreation also gives Rocky a greater presence in international markets.

Source: Update: Rocky Brands Earnings