Our first recommendation—a fitness equipment manufacturer—beat analysts’ estimates by a penny last quarter, and is expected to grow at a double-digit pace this year. We also have two sell recommendations for you today.
Buy: Nautilus (NLS)
From The Oberweis Report
Nautilus (NLS) is a leading supplier of fitness equipment for home use, with leading brands including Bowflex, Nautilus, Schwinn and Universal.
The company markets its products through two primary distribution channels: direct to consumers (approximately 2/3 of its business) through TV ads, catalogs, and the Internet; and the retail channel (approximately 1/3 of its business) through retail company stores and websites.
Several new product introductions have augmented recent growth and should continue to drive sales, including momentum in the Bowflex MAX Trainer cardio machines with a recent launch in select international markets and a well-received fall introduction of the Schwinn Airdyne AD Pro Total Fitness Bike. Other new products should benefit from the new trend in fitness whereby consumers track, store, and analyze their workouts, such as the Treadclimber TC100 and TC200 cardio machines, and the Bowflex SelectTech 560 dumbbells, which offer “smart” technology and Bluetooth compatibility.
The company closed the acquisition of Octane Fitness on Dec. 31, 2015, which adds specialty retail, commercial business, and heavier international exposure to the Nautilus footprint, providing a significant cross-sell opportunity and expected to be additive to earnings per share in 2016.
In the company’s latest reported fourth quarter, sales increased approximately 15% to $109.1 million from $94.9 million in the fourth quarter of last year. Nautilus reported earnings per share of $.39 in the latest reported fourth quarter versus $.33 in the same quarter of last year.
Jim Oberweis, CFA, The Oberweis Report, www.oberweisreport.com, 800-323-6166, March 2016