Aritzia (TSE:ATZ) Posts Strong Q2 Results

Posted on October 16, 2019 by Dan Kent

Disclaimer: The writer of this article may have positions in securities listed below. Stocktrades may also be compensated via affiliate links in the post below

Aritzia (TSX:ATZ) posted second quarter 2020 results that have left investors more than impressed. As a result, the top Canadian stock has launched as much as 17% during today’s trading.

So how did the Canadian retailer do? Lets take a look.

Aritzia’s (TSE:ATZ) second quarter highlights

Aritzia posted its 20th quarter of comparable sales growth at 8.4%. The company also increased its net revenue year over year by 17.4% to $241.2 million.

The company’s profit margins stayed relatively flat at 37.2% compared to 37.4% one year ago today.

Earnings per diluted share increased by 12.5% year over year to sit at $0.18.

With revenue of $241 million, Aritzia actually missed on top line analyst estimates. On the low end, analysts figure the company would generate revenue of $268 million. But, considering what the company was able to do in terms of profitability, it seems the market is forgiving its revenue miss.

Diluted earnings per share came in at $0.18, which was a near 40% surprise on expected earnings of $0.13.

How does Aritzia look moving forward?

Aritzia made a lot of strategic advancements in Q2 to go along with its strong financial results. It opened a store in the Mall of America, and has seen strong eCommerce revenue growth.

The strength of Aritzia is its brand, and it is doing all that it can to increase awareness by adding a VIP program in the United States.

Aritzia has shown strong growth over the last 3 years. Earnings have gone from $32 million in 2016 to nearly $79 million today, and revenue has increased from $542 million to $874 million over the same time period. This equates to a CAGR (Compound Annual Growth Rate) of 35.15% on its earnings and 17.27% on its revenue.

Considering analysts only expect annual growth of around 18% over the next 5 years, Aritzia is topping these expectations and then some.

The company is currently trading at a premium, which is to be expected after a daily gain of nearly 17%. With forward price to earnings of 17.64 and a price to book of nearly 8.5, you’re buying a lot of growth at today’s price levels with Aritzia.

It’s always nice when you see one of the stocks you bought hit the news for the right reasons. Bombardier however, has hit it for all the wrong ones recently.

Dan Kent

About the author

An active dividend and growth investor, Dan has been involved with the website since its inception. He is primarily a researcher and writer here at Stocktrades.ca, and his pieces have numerous mentions on the Globe and Mail, Forbes, Winnipeg Free Press, and other high authority financial websites. He has become an authority figure in the Canadian finance niche, primarily due to his attention to detail and overall dedication to achieving the highest returns on his investments. Investing on his own since he was 19 years old, Dan has compiled the experience and knowledge needed to be successful in the world of self-directed investing, and is always happy to bring that knowledge to Stocktrades.ca readers and any other publications that give him the opportunity to write. He has completed the Canadian Securities Course, manages his TFSA, RRSPs and a LIRA at Questrade, and has compiled a real estate portfolio of his primary residence and 2 rental properties, all before his 30th birthday.