Johnson Outdoors: Valuation Appeal Outweighs Increased Downside Risks
Summary
- Johnson Outdoors reported a disappointing first quarter 2025 result, with a continuation of falling sales and poor expense control.
- The decision to spend $12m to acquire a diving equipment business has weakened the company’s balance sheet at a time when the outlook for operating cash flow is poor.
- Given that the first fiscal quarter of the year is seasonally soft, the lack of progress on excess inventory is understandable.
- After a sharp share price decline, Johnson Outdoors looks very cheap relative to valuation.
- Despite a number of salient downside risk factors, a Buy rating can still be justified for investors willing to take a medium-term perspective.
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