Baird Reiterates Sportsman's Warehouse Outperform Rating Following 'Quality' Beat And Raise

Baird reiterated its Outperform rating on Sportsman's Warehouse Holdings Inc SPWH after the company delivered a beat and raise quarter.

The company's second quarter EPS surged 44 percent to $0.20, comfortably ahead of Baird/Street's $0.16 estimate and guidance of $0.15-$0.17. Comps grew 2.9 percent versus flattish estimate and the third quarter comps expected to grow 2–4 percent.

Comps were driven by strength in firearms/ammo, though other "use" categories like fishing performed well. Private label sales grew 25 percent, with particular traction in hunting apparel (cammo), and Baird sees the segment has further room for growth.

"We see several factors supporting continued comp momentum across 2H16, including moderating headwinds from new competition (<100bps hit expected in 4Q vs. 2Q's 210bps), cycling the drag in oil/gas-related markets beginning in 3Q (hurt 2H15/1H16 comps by ~70bps/~100bps), and potential for more seasonal weather (benefiting clothing/footwear)," analyst Peter Benedict wrote in a note.

The company also raised full-year EPS outlook to $0.70-$0.76 from $0.65-$0.73, and the analyst also increased his FY16 EPS view to $0.73 from $0.70.

"With a blend of identifiable/potential near-term comp drivers and a still attractive long-term growth story (low-cost store model, white space, opportunities to improve productivity/profitability), we reiterate our Outperform rating/$15 price target," Benedict added.

At time of writing, shares fell 4 percent to $10.55.