Zumiez: Resilient North America Offset by Volatile International Trends, Justifying a Balanced Hold Rating

William Blair analyst Dylan Carden has maintained their neutral stance on ZUMZ stock, giving a Hold rating yesterday.

Dylan Carden has given his Hold rating due to a combination of factors tied to Zumiez’s mixed operating performance and limited visibility. While the company delivered positive overall holiday comparable sales and solid strength in North America—helped by a rebound in skate and healthy performance in women’s, men’s, accessories, and hardgoods—its international business materially underperformed expectations, forcing management to trim fourth-quarter revenue guidance. At the same time, Zumiez modestly raised its earnings outlook for the quarter, reflecting better merchandise margins in Europe and North America and disciplined cost control, which partially offsets top-line softness.

Carden also notes that valuing the stock is complicated by ongoing volatility in international trends, making future results harder to forecast even as the North American business shows resilience. The shares trade at a multiple that already incorporates expectations for high-single-digit sales growth, modest margin improvement, and further SG&A leverage over the next few years. Given the combination of stronger profitability initiatives, but weaker and less predictable international sales and only moderate upside relative to current valuation, he views the risk/reward as balanced at this time, supporting a Hold rather than a more aggressive rating.

In another report released yesterday, TipRanks – Google also reiterated a Hold rating on the stock with a $29.00 price target.

Based on the recent corporate insider activity of 30 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of ZUMZ in relation to earlier this year.