Why Aritzia (TSX:ATZ) Stock Climbed 15% on the TSX Today

Aritzia (TSX:ATZ) stock climbed 15% in early morning trading after smashing analyst expectations and increasing its future outlook.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published October 14, 2021 10:13 am EDT

Aritzia (TSX: ATZ) started off this next earnings season with a bang, beating analyst expectations and climbing 15% in early morning trading on Thursday.

What happened?

Aritzia stock started to climb after reporting net revenue increases of 74.9% year over year to $350.1 million, with adjusted EBITDA increasing 20% to $72.9 million. This was helped by a 48.7% year-over-year increase in the e-commerce sector, and retail revenue was up 95.3% as well.

The numbers were nothing short of outstanding, with the net revenue growth showing that Aritzia stock continues to grow through “all channels.” While e-commerce continued to climb, in-store revenue came back online and could only climb higher with the holiday season coming up. In fact, sales in-store weren’t only comparable but exceeded levels reached pre-pandemic.

So what?

But what analysts were really impressed with was the growth of Aritzia stock in the United States. Growth in the country soared at an unprecedented 174% year over year. The company has been available in the U.S. since 2007, but Chief Executive Officer Brian Hill stated the company has “never seen growth like this.”

Analysts expected Aritzia stock to earn adjusted profit of $296.2 million in revenue, beating that number by 18%, an incredible feat. What’s more, it now expects net revenue to continue climbing, as it continues to expand in the United States. For the third quarter, even with supply chain disruptions and labour shortages, it expects net revenue of between $350 and $375 million.

Now what?

Shares of Aritzia stock were up over 15% in early morning trading. Before the report, analysts had an average share price of $44. There is likely to be increases across the board after such a strong report and future outlook.

Furthermore, shares are up 85% year to date and 142% in the last year as of writing. Now, of course, Aritzia stock is expensive right now. It has a P/E ratio of 83.2 and EV/EBTIDA of 22.1. However, analysts remained confident it’s a strong buy, or at least a buy in this market. The future looks bright for Aritzia stock, so it could be a strong option for long-term investors, as it continues to expand into the U.S. market.