TBL--LifeStyle--Footwear--Value stock. CHeck very closely at 40 the 200 dma , and they should be compelling at 33-35 a
share. They are undercovered, with only one analyst following TBL. They may very well be declining over the next several weeks so we may look for a really low basis to buy.
I have been long TBL a couple of times in the past 3 years and they go to levels where they become undervalued and then rally nicely.
they have a trailing PE of 17.... a 1 yr earnings growth rate of 25% and a 3 year earnings growth rate of 45%.
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Stocks in Focus Jan 11 2000 9:00AM CST Archives...
Timberland: A Super Alternative to Technology Stocks
by Blair G. Jeffery
Timberland, known by most in the footwear industry as the "Boot Company" because of the company's outstanding success in the hiking boot market, is an exceptional stock not only because of its fundamentals, but also because it represents a steady alternative to high-flying technology stocks. The Timberland Company {TBL}, founded in 1978 by Nathan Swartz, is one of the footwear industry's leading hiking boot and apparel companies; it is also a leading fundamental stock with exceptional long-term growth potential.
Fundamental Analysis
TBL first appeared in the Fundamental Rank Search #1 several months ago. The Fundamental Rank Search #1 was discussed at length last week on WallStreetCity. Click here to learn more about this search strategy.
Timberland, with its 70.5 fundamental ranking figure, is one of the top twenty-five stocks in the entire marketplace for fundamental rank. Fundamental Rank measures the fundamental strength of a stock by using factors primarily derived from balance sheet items. Fundamental Rank is calculated by combining values for these ProSearch criteria: Current Ratio, Debt-to-Equity Ratio, Interest Coverage, Cash Flow Growth and Cash-to-Price Ratio.
The company's fundamental prowess is not limited to balance sheet items. Timberland boasts one of the strongest net profit margins in the industry with a 7.33 percent margin. Additionally, the firm has rapidly increased gross profit margins in each of the past four years. Timberland has recognized superb revenue and earnings growth over the past three years as a result of these aforementioned margins, and the company's lone stock analyst projects these figures to increase in the future. Timberland is expected to earn $3.50 per share in fiscal year 2000 as compared to $3.05 per share in fiscal year 1999 - a fifteen percent increase.
Roughly 77 percent of Timberland's revenues stem from sales of its footwear, with the remaining 23 percent accounted for by apparel sales. Timberland has yet to truly expand sales worldwide with a somewhat small 29 percent of sales coming from outside the U.S. borders, but company officials seek to expand the company's reach into more global marketplaces in the years to come.
Timberland carries very little long-term debt and, in fact, has been reducing this debt in recent years. The September balance sheet shows cash and cash equivalents of $67 million compared to long-term debt of $106 million. Both figures show Timberland to be a strong, fundamentally sound security.
Technically Speaking
On the technical side, Timberland looks equally impressive. The stock has traded in a solid uptrend for the last twelve months, gaining 134 percent in that time. Despite Timberland's overwhelming success this year, the stock remains in fair value territory according to the stock's Wilder RSI reading of 44. A reading of 70 indicates an overbought condition for a stock. Given the firm's Wilder reading and the stock's trend, shares of Timberland appear primed to post further gains in the future.
TBL's 12-month chart with Wilder RSI indicator and 30-day moving average
The Future
Although the overall outlook for the footwear industry group does not appear promising - with analysts downgrading their industry rating to an Intermediate and Near-term Neutral, the future looks particularly promising for Timberland. The firm expects earnings growth of 15 percent per year for the next five years coupled with an ever increasing gross profit margin. In July of 1998, Timberland released its much acclaimed "cooling" hiking boots to a very eager audience. Sales of the boot were better than expected and have continued that success well into 1999. In 2000, Timberland hopes to further its reach in the apparel market and expand on its revenue growth. Timberland appears to be an exceptional, low volatility growth stock with outstanding long-term prospects.
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