Johnson Outdoors (NASDAQ:JOUT) Is At The Nexus Of Multiple Trends

Johnson Outdoors Isn’t Just Trolling Motors

Johnson Outdoors NASDAQ: JOUT is one of those hum-drum investments that tends to not get much spotlight. The company makes outdoor electronics including trolling motors, depth finders, and other high-tech gear for fishermen, camping, and campers (read camper vans and RVs) which, ordinarily, aren’t all that exciting. Until you add in the pandemic, social distancing, and the mad rush to outdoor activities that have the boating, camping, and campervan/RV industry buzzing. Because so many of the devices are connected this makes Johnson Outdoors not only a play on outdoor recreation and #vanlife but also one on tech, 5G, and the IoT. And it pays a dividend so what is there not to love?

“The 2020 fiscal year was like no other year in our history. We started the year with a very strong first quarter, but the onset of the pandemic and the initial stay-at-home mandates cut short our momentum and significantly impacted our second and third quarters, the heart of our primary selling season. As those mandates eased, we saw demand ramp up and participation grow in Fishing, Camping and Watercraft Recreation. This positive late-season momentum resulted in a strong finish to the year,” said Helen Johnson-Leipold, Chairman and Chief Executive Officer.

Johnson Outdoors Blows Past Consensus Targets

Johnson Outdoors saw its revenue fall by about 20% in the fiscal 3rd quarter, the calendar 2nd, but that all changed in the final quarter of the year. The fiscal fourth-quarter revenue surged 58% on a YOY basis due to the combination of pent up demand, economic reopening, and social distancing. The revenue beat the consensus by more than 3000 basis points which is saying quite a lot because the consensus targets are up nearly 40% from the spring low. For the full-year, company-wide revenue grew by about 6.0%.

Moving down the report, the company was able to maintain steady margins over the course of the years. Gains in operating leverage due to sales increases were offset by higher costs related to the pandemic, product-mix shifts, and eCommerce. The company did not break out its eCommerce sales figures but did say digital was a driving force for results. On the bottom line, the company reported $1.53 in GAAP earnings or $0.73 above the consensus.

Looking to the cash flow statement and balance sheet, cash flow improved more than 1000% from the same quarter last year while total cash grew by 40%. The company has no debt to speak of leaving free-cash-flow near 80% of earnings which is great news for this dividend-paying stock. The company did not give guidance for the upcoming quarter or year but says the company is in a good position relative to industry trends. Notably, CEO Johnson-Liepold says the hardest part has been ramping production to meet the demand.

Johnson Outdoors Pays A Safe Dividend

Johnson Outdoors pays a safe and growing dividend with only one downside, the yield. The yield is under 1.0% but there is a silver lining; the company is in a cycle of dividend increases with a 17% CAGR. The most recent increase was in the early part of the fiscal 4th quarter and it was worth 25%. Based on the outlook for earnings, the cash flow, and the balance sheet there is no reason not to expect another large increase in mid to late calendar 2021.

The Technical Outlook: Johnson Outdoors Is Ready To Move Higher

Shares of JOUT made a nice rebound from the March lows but have been struggling since hitting the high in late July. The stock formed a nice trading range with firm support at the $80 level and since confirmed support at a higher level. Now, with share prices moving above the 30-day EMA, a Rising-Three-Methods continuation pattern in the candles, bullish crossovers in the indicators, and a favorable outlook for growth it looks like the rally could be back on. In the near-term, traders should expect to see resistance at $92 and $94. Longer-term, I see this stock moving above 2020’s high to retest the $105 level.