Benj GallanderCanada Goose HoldingsGOOS.TODON'T BUYFeb 19, 2020

Good proxy for health of consumers in Canada. Luxury item that is discretionary. Hard to excited about this style of business. Not seeing major spending from average population. Better options for investors out there. 

Great company and brand, iconic. Don't buy. Chart is terrible. Darling of an IPO, up to a screaming high, back down to earth. Proxy for Canada-China and US-China relations. A play on consumer discretionary spending. Saturated in Canada, and their coats last forever so only need one.

Consumer discretionary spending is challenged, especially out of China. A pivot in interest rates would change his tune.

While slashing guidance may be prudent, investors still react to expectations vs reality. The guidance cut was likely bigger than most expected. In addition, the company is transitioning to a new CFO which generally causes some investor angst. GOOS said sales momentum began to 'slow noticeably' in September. With China struggling, investors are just preferring to sit this one out, for now. 3Q revenue guidance dropped to $575M to $700M, vs estimates of $727M, a not-igsignificant drop if it comes in at the lower end of the range. Debt may also be a worry here. Still, at 11X earnings now, it is historically cheap, and despite the forecast analysts still expect earnings growth over the next two years. 
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Revenue of $293 mln beat estimates of $259 mln and EPS of $0.14 beat estimates of $0.11. For revenues, the outlook for the next year was in-line but the EPS outlook came in lower than expected which is likely what is weighing on shares. Total revenues grew 31% for the quarter and the company is working to expand their direct to consumer channel as well as diversifying into different types of apparel. We think the quarter looked ok and demand trends appear to remain strong but the lower earnings guide was not ideal. 
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Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Overall likes the stock. The Japan deal to expand their relationship with Sazaby is positive. The joint venture should generate total revenues of 60-65M CAD in Fiscal 2023. Good prospects in a recovery world. China’s growth could be a headwind, since it is still closely tied to their performance. Unlock Premium - Try 5i Free