Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Is Quiksilver, Inc. (ZQK) About to Surf Into a Tsunami? – NIKE, Inc. (NKE)

Quiksilver, Inc. (NYSE:ZQK)’s long-term debt is steadily rising, but its cash reserves and free cash flow growth are declining. Although its expenses are steadily declining, the improvement is insufficient to completely offset the other losses.

Quiksilver’s primary competitors are NIKE, Inc. (NYSE:NKE), Adidas and Billabong. Although its competitors offer a wider range of athletic products, they cater to the same demographic of younger, active adults. Let’s see how these four companies measure up to each other fundamentally.

Forward P/E 5-year PEG Price to Sales (ttm) Return on Equity Debt to Equity Profit Margin Qty. Revenue Growth (Y-O-Y) Qty. Earnings Growth

(Y-O-Y)

Quiksilver 18.73 2.59 0.52 -3.29% 133.5 -0.97% -4.10% N/A
Adidas 14.45 -3.46 1.08 9.87% 28.10 3.53% 3.20% N/A
Nike 18.12 2.00 1.95 22.04% 3.28 8.20% 7.40% -18.10%
Billabong 12.21 1.28 0.31 -117.03% 49.97 -59.94% -8.10% N/A
Advantage Billabong Billabong Billabong Nike Nike Nike Nike Nike

Source: Yahoo Finance, March 12.

From this chart we can see that Australian rival Billabong, which had a pretty rough ride over the past five years, is clearly the cheapest stock. However, it is currently approaching penny stock territory for a reason – a lack of profits, negative profit margins and declining revenue growth all indicate that it is in serious trouble. Yet Billabong, which offers surf, skate, snow and sports apparel, has the most similar product line to Quiksilver.

Meanwhile, larger companies NIKE, Inc. (NYSE:NKE) and Adidas have been able to post positive revenue growth, but are also finding it difficult to grow their bottom lines. However, many investors consider Adidas and Nike to be large enough to be lifted by a rising tide in consumer sentiment – while Quiksilver and Billabong may be left behind.

Yet a look at the price performance of these four stocks over the past 12 months reveals an unusual trend – Quiksilver is actually outperforming all of its rivals except for Adidas.

Source: Google Finance, March 12.

The Foolish Bottom Line

Despite the fact the Quiksilver’s stock price has held up better than other athletic apparel retailers over the past year, I wouldn’t recommend investors to buy this stock now. Under new CEO Andy Mooney, the company is still trying to turn itself around by restructuring management, cutting costs and expanding margins.

Yet losses across the world, anemic same-stores sales growth, declining revenue and a lack of profits simply tell me that there are better retail stocks out there, more deserving of your investment.

The article Is Quiksilver About to Surf Into a Tsunami? originally appeared on Fool.com and is written by Leo Sun.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.