Chances are you may have never heard of Iconix Brand (ICON). But the company’s broad and growing portfolio of leading brands includes such household names as Candies, London Fog, Sharper Image, and Danskin.
Iconix licenses its brands to such major retailers as Wal-Mart, Target, and Kohl’s, helping generate a steady revenue stream from royalty payments. The company does not maintain product inventory, resulting in higher profit margins than traditional apparel companies. Acquisitions are a key growth driver, and the company has completed more than 20 deals since 2004.
Iconix boasts an Overall score of 90 on solid scores for Momentum (88), Quality (79), and Earnings Estimates (72). Consensus estimates project per share earnings growth this year of 8%—to $2.58.
Based on potential contributions from acquisitions and marketing initiatives, Iconix seems capable of beating consensus profit estimates. In the December quarter, per-share profits jumped 32% to $0.54 and topped the consensus by $0.03, marking the seventh consecutive positive surprise.
Iconix, which authorized a $500 million stock buyback plan last month, is being initiated as a Buy.
Richard J. Moroney, CFA, Upside, www.upsidestocks.com, 800-233-5922, March 3, 2014
