Simple Concepts Research Group

Is Sportsman’s Warehouse (NASDAQ: SPWH) A Buy or Sell At This Price?

Dec 9, 2021

Sportsman’s Warehouse (SPWH) Company Overview & Stock Price Forecast

This article provides a brief analysis and stock rating for Sportsman’s Warehouse (SPWH) including an updated stock price target. Additional data on the company’s earnings yield, price/earnings ratio, return on invested capital and YTD performance are discussed as well.

Sportsman’s Warehouse Fundamentals

SPWH Stock Rating

Stock Price Target: $20.74

In the section below, we discuss the earnings yield, P/E, return on invested capital and YTD performance for Sportsman’s Warehouse in comparison to the Retail industry and the S&P 500.

Sportsman’s Warehouse is a Small Cap company with a Market Cap of $700.1M.

How are investors using Sportsman’s Warehouse earnings yield to assess the company?

Sportsman's Warehouse (SPWH stock)_ Earnings Yield in Comparison to the Retail Industry, S&P 500 and 10 Year Treasury Rate

The earnings yield is used to show the percentage of a company’s earnings per share. Investors typically use earnings yield to determine which assets are underpriced or overpriced relative to other variables, like sector, industry or bond yields. Simply put, the earnings yield of a company can be used to assess how expensive a company is in relation to the earnings that are generated. When valuing companies, the SIS Research Group does not utilize the inverse P/E ratio to calculate the earnings yield. Instead, we use an adjusted earning yield calculation to capture variation amongst companies (i.e. debt and tax rates).

The current earnings yield for Sportsman’s Warehouse is 25.25%%, in comparison to 3.50% for the S&P 500 and 1.35% for the 10-year treasury bond. The median earnings yield for the Retail industry is 6.97%.

What does Sportsman’s Warehouse Price-to-Earnings Ratio (P/E) tell investors about the company?

Sportsman's Warehouse (SPWH)_ Price-to-Earnings, Price-to-Sales and Price-to-Book Value in Comparison to the Retail Industry and the S&P 500

The price-to-earnings ratio (P/E) is a relatively popular metric used by investors and analysts for valuing a company’s stock. The P/E ratio can be used to show how a stock’s valuation compares to other companies and the total market. Investors use the P/E ratio to determine what the market is willing to pay today based on a company’s past or future earnings. A high P/E ratio could mean that a stock’s price is too high relative to earnings, which could be a signal that a stock is currently overvalued. In turn, a low P/E ratio could indicate that a company’s current stock price is low relative to earnings. 

Sportsman’s Warehouse is currently trading at a P/E of 6.48. The P/E for the Retail industry is 17.51 and the P/E for the S&P 500 is 28.94.

What is the current Price-to-Sales Ratio (P/S) for Sportsman’s Warehouse?

The Price-to-Sales Ratio (P/S) looks at a company’s market cap and revenue to determine valuation. The P/S ratio is calculated by taking a company’s market cap and dividing by the total sales or revenue. The P/S ratio gives an idea of how much the market values every dollar of a company’s sales and can be effective in valuing unprofitable growth stocks or companies that are currently undergoing special situations or challenges. A lower the P/S ratio can be an indicator of good value.

Sportsman’s Warehouse is currently trading at a P/S of 0.39. The P/S for the Retail industry is 0.81 and the P/S for the S&P 500 is 3.14.

How does Sportsman’s Warehouse Price-to-BookRatio (P/B) compare to the Retail industry?

Price-to-book value (P/B) is the ratio of the market value of a company’s shares divided by its book value of equity (the value of it’s assets on the books). The book value is the difference between the book value of assets and liabilities. Typically, investors use the P/B ratio to assess if a stock is valued properly (a value of one means that the stock price is trading in line with the book value of the company). A company with a high P/B ratio could mean the stock price is overvalued as well as the converse.

Sportsman’s Warehouse P/B ratio is 2.73. The P/B for the Retail industry is 5.51 and the P/B for the S&P 500 is 4.74.

How attractive is Sportsman’s Warehouse Return on Invested Capital (ROIC) to investors?

Sportsman's Warehouse (SPWH)_ Return on Invested Capital in Comparison to the Retail Industry and the S&P 500

Investors use the return on invested capital (ROIC) to assess how efficient a company is at turning capital into profits. The ROIC is the amount of money a company makes on it’s investments that is above the average cost of debt and equity.

Investors can use the ROIC to provide context for metrics like the (P/E) ratio. For instance, when used in isolation a low P/E ratio could suggest a company is oversold but the decline could be because a company is no longer generating value for shareholders. Conversely, companies that consistently generate high rates of ROIC can plausibly trade at a premium compared to other stocks, even if their P/E ratios are high.

Sportsman’s Warehouse ROIC is currently 21.03% in comparison to 23.63% for the Retail industry and 8.60% for the S&P 500.

What is Sportsman’s Warehouse YTD Performance in comparison to its industry and the total market?

The year-to-date (YTD) performance is the amount of profit/loss realized by a stock since the first trading day of the current calendar year. 

The YTD performance for Sportsman’s Warehouse is -25.19%. The Retail industry has a YTD performance of 46.22% in comparison to the YTD S&P 500 performance of 25.58%.

Sportsman's Warehouse (SPWH)_ YTD Performance in Comparison to the Retail Industry and the S&P 500

Recent Financial Results

  • Net sales of $401M, an increase of $15.3M, or 4.0%, compared to the third quarter of fiscal year 2020
  • Same store sales decreased 1.5% during the third quarter of fiscal year 2021 compared to the third quarter of fiscal year 2020
  • Compared to the same period of 2019, same stores sales increased 39.4%
  • Gross profit of $129.6M, or 32.3% of net sales, compared to $130.6 million, or 33.9% of net sales in the comparable prior year period
  • Net income reported of $21.9M compared to net income of $30.5M in the third quarter of fiscal year 2020
  • Adjusted EBITDA of $39.3M compared to $49.9M in the comparable prior year period

Stock Price Target: $20.74

Company Overview

SPWH Stock Rating

Sportsman’s Warehouse operates as an outdoor sporting goods retailer in the US. It offers camping and clothing products, as well as technical gear and outdoor equipment.

The company’s stores provide archery technician services as well as issues hunting and fishing licenses. Additionally, it offers various private label and special make-up offerings under the Rustic Ridge, Killik, Vital Impact, Yukon Gold, Lost Creek, and Sportsman’s Warehouse brands.

As of March 2021, the company operated through 112 stores in 27 states. Sportsman’s Warehouse was founded in 1986 and is headquartered in West Jordan, Utah. The current CEO is Jon Barker.

Be sure to add Sportsman’s Warehouse (SPWH stock) to your Watch List and if you haven’t done so already, check in on the performance of our Current Portfolio. Keep it simple and always do your due diligence.

This material is provided for informational purposes only and is not financial advice. The information contained herein should not solely be used for the formation of an investment decision, whether you are a long term or short term investor.