Update: Rocky Brands Earnings

Aug. 5.14 | About: Rocky Brands, (RCKY)

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.

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