Canada Goose (TSX:GOOS) recently surprised investors and Street analysts with a strong earnings report on May 16, sending its stock soaring by over 25% in a few days. By comparison, the TSX Composite benchmark has remained largely unchanged during the same period. After the recent rally, GOOS stock now trades at $19.45 per share with a market cap of $1.9 billion.
But could Canada Goose stock maintain its momentum and deliver more upside, making it a good buy for long-term investors? Let’s take a closer look at the key fundamentals from the company’s latest earnings report and growth prospects to find out.
Canada Goose’s fiscal 2024 earnings report
If you don’t know it already, Canada Goose is a Toronto-headquartered company that is renowned for its premium outerwear, including parkas and jackets designed for extreme cold. The company has over six decades of experience in the industry and mainly operates through its direct-to-consumer (DTC) channel, which includes e-commerce and retail stores, and its wholesale channel.
In its fiscal year 2024 (ended in March), Canada Goose posted a 9.6% YoY (year-over-year) increase in its total revenue to $1.3 billion with the help of a solid 18% YoY jump in its DTC segment sales.
Although its wholesale revenue last fiscal year declined due to weak consumer spending, the company still managed to report a strong 7.6% YoY rise in its adjusted annual EBITDA (earnings before interest, taxes, depreciation, and amortization) to $297.8 million, also exceeding Street analyst expectations of $270.3 million. In fiscal 2024, GOOS’s adjusted EBITDA margin stood firm at 22.3%, with a minor change compared to 22.7% in the previous fiscal year. These strong financial results could be the primary reason why Canada Goose stock has jumped over 25% after announcing its latest earnings.
Focus on growth drivers for the future
Canada Goose’s latest earnings report clearly showed that it has been able to navigate the challenges posed by the ongoing macroeconomic woes and maintain its profitability. To further accelerate growth in the long term, the company is concentrating on several key drivers. These include simplifying operations and focusing on initiatives that promise sustained performance.
It opened 17 permanent stores in fiscal 2024, extending its total prominent store count to 68. In the ongoing fiscal year, Canada Goose plans to broaden its product range beyond its well-known parkas by introducing new and innovative products. To minimize the negative impact of inflationary pressures on its profitability, the company also plans to moderate the pace of new store openings but invest in technology and product development, which could strengthen its long-term growth prospects.
Foolish takeaway
Interestingly, besides its home market, Canada Goose makes a large portion of its revenue from international markets. In its fiscal year 2024, it generated nearly 38% of its total revenue from the Asia-Pacific region, while the remaining sales came from other markets, including the United States, Europe, and Canada.
While it’s true that global economic uncertainties amid high inflation could affect Canada Goose’s earnings growth in the near term, it still expects to post positive revenue growth in its fiscal year 2025, with sales growth likely to accelerate in the second half of the fiscal year. In addition, the company plans to increase the prices of some of its products to protect the profit margin. Given these positive factors, along with its focus on retail execution and product innovation, I find Canada Goose stock really attractive to buy now, especially if you can hold it for the long term.
