VSTO - Embedded Expectations Analysis - 2021 06 08
Vista Outdoor Inc. (VSTO:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with an 11.6x Uniform P/E, implying bearish expectations for the firm. However, although management's concerns about product demand, acquisitions, and wage inflation suggest the potential for near-term headwinds, market expectations are still too bearish, suggesting long-term equity upside remains warrantedSpecifically, management may have concerns about the sustainability of demand for their products, low retailer ammunition inventories, and wage inflation pressures. Also, they may lack confidence in their ability to attract talented leaders for their business transformation, mitigate share dilution, and work through their order backlog. In addition, they may be exaggerating the potential of their Remington and HEVI-Shot acquisitions, the health of their military and law enforcement contract business, and their leadership position in primers
Although management's concerns about product demand, acquisitions, and wage inflation suggest the potential for near-term headwinds market expectations appear too bearish given the firm's strong demand opportunities. As such, long-term equity upside remains warranted
Vista Outdoor is a designer, manufacturer and marketer of consumer products in the outdoor sports and recreation markets. The company's Outdoor Products product lines are action sports, archery/hunting accessories, outdoor cooking, golf, hydration products, optics, shooting accessories and tactical products. The Shooting Sports segment designs, develops, produces, and sources ammunition and firearms for the hunting and sport shooting markets, as well as ammunition for local law enforcement, the U.S. government and international markets. The Shooting Sports product lines include centerfire ammunition, rimfire ammunition, shotshell ammunition, reloading components, and firearms.
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