Seeking Alpha: Summer Infant's Slow Road Back

Progress in Summer Infant's (NASDAQ:SUMR) turnaround remains slow, but there have at least been signs of progress. Revenue growth has been disappointing, but the company's core revenue continues to grow despite price reductions in the monitor line and an ongoing restructuring of the company's core product line. Likewise, the company has made meaningful progress working off obsolete inventories and reducing its working capital.

Having a bigger presence in Europe may improve Summer Infant's long-term revenue growth prospects, but it will cost money to support. Moreover, Summer Infant is still a small player in a market that includes huge retailers like Wal-Mart (NYSE:WMT), Target (NYSE:TGT), and the Toys/Babies R Us chains and large competitors like Mattel (NASDAQ:MAT), Newell Rubbermaid (NYSE:NWL), and Dorel (OTCPK:DIIBF). While there would seem to be 25% to 50% upside from here on the basis of mid-single-digit, long-term revenue growth and low-to-mid single-digit FCF margins, the execution risk here is very high and management really needs to deliver better revenue and gross margin numbers over the next few quarters.

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Summer Infant's Slow Road Back

Seeking Alpha: Summer Infant Looking To Transition Back To Growth

Infant products manufacturer Summer Infant (NASDAQ:SUMR) spent most of 2014 getting its house back in order. The company exited its low-margin licensing business, slashed its SKU count, restructured its product development process, as well as its sales approach, and reoriented the company around internally-driven sales and ROIC targets.

It seems premature to say "job done", but the company has definitely stabilized the business with a return to sales growth (high single-digit to low double-digit on an adjusted basis) and improving gross margins. Now it is time for management to show that it can gain share in important categories like monitors and strollers and establish a footprint in new retail channels. I'm bullish on management's plans and I believe that 2015 should see progress on internal growth initiatives. With a fair value target of almost $4 based on what I believe are relatively conservative projections, there is still credible upside to this consumer goods story.

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Summer Infant Looking To Transition Back To Growth

Seeking Alpha: Summer Infant Looking To Get Smaller, Smarter, And More Profitable

Picking Summer Infant (SUMR) as a Top Idea in mid-October of 2013 has been a boneheaded move so far, as the stock has declined about 25%. Summer Infant's share price weakness has come in response to greater-than-expected struggles to migrate away from low-margin licensed business and reduce SKU counts.

With new management in place, Summer Infant is continuing its basic strategic decision to slim down and refocus itself around a smaller number of more profitable, more competitive SKUs. This is not an unusual or uncommon phase in prior growth-by-acquisition stories, but the process can be difficult and stretch on longer than investors' patience. Summer Infant has a long way to go before it is a more credible threat to Dorel Industries (OTCPK:DIIBF), Newell Rubbermaid's (NWL) Graco, or Mattel's (MAT) Fisher-Price, but Summer Infant doesn't have to become the best to be better.

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Summer Infant Looking To Get Smaller, Smarter, And More Profitable

Seeking Alpha: Dorel Industries Trying To Ride Out A Flat Tire

Segment-leading brands don't always guarantee top-flight performance, as Canada's Dorel Industries (OTCPK:DIIBF) demonstrates. The stock hasn't been terrible, but it doesn't really stack up so well against the S&P 500 over the last one, two, and five-year periods, even though Dorel boasts significant market share in the infant/child products, bike, and ready-to-assemble furniture markets.

I wish I could see a brighter future for this company, but I have some doubts. I don't think the issues that are currently hitting the bike business are going to last forever, but this isn't a company that has done all that much from an organic growth, operating margin, or return on invested capital perspective over the past decade. The stock does seem a little undervalued today, but I can't get comfortable with the idea that it's really an outstanding performer.

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Dorel Industries Trying To Ride Out A Flat Tire

Seeking Alpha: Summer Infant's Self-Improvement Could Take It A Lot Further

I approach a bullish article on Summer Infant (SUMR) with more than a little trepidation, as I have been burned by writing favorably about this name once before. I previously underestimated the serious operational challenges that the company faced after a series of debt-fueled acquisitions and the resulting missteps with new product introductions, not to mention challenges at major retailers like Toys R Us/Babies R Us and the increasing penetration of private label competition.

Even with the stock up more than 80% over the past year, I do wonder if Summer Infant is back on stronger footing and has further gains ahead of it. Management has elected to discontinue low-margin licensing arrangements, is rationalizing its SKU count, and is broadening its retailer base. What's more, it would seem that conservative estimates for revenue and cash flow (not to mention discount rate) still leave appreciation potential in excess of 40% from today's levels. It has to be noted, though, that Summer Infant is a tiny player in the baby care products market and has yet to demonstrate that it can deliver consistent organic revenue growth, let alone attractive margins or cash flow.

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Summer Infant's Self-Improvement Could Take It A Lot Further

Investopedia: Helen Of Troy Needs To Exploit Distracted Competitors

Acquisitions can obviously expand a company's operations, but even growth-by-acquisition stories ultimately come down to a company's ability to execute. Helen Of Troy (Nasdaq:HELE) has always been a willing (and aggressive) acquirer, and that has allowed management to build the company into a diversified collection of well-known home and personal care brands. The question now, however, is whether this company can take advantage of the rampant restructurings among its larger rivals to widen its niche and gain market share.

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 http://www.investopedia.com/stock-analysis/2013/Helen-Of-Troy-Needs-To-Exploit-Distracted-Competitors-HELE-PG-UL-CLX0114.aspx

Investopedia: Summer Infant Still Colicky

Summer Infant (Nasdaq:SUMR) could have been a really interesting growth story. There's certainly a big enough market for infant/child products, and the company's position with Toys R Us gives it a platform whereby acquiring smaller companies (especially those lacking good retail distribution) can be highly leveragable. Unfortunately, it's just not working out to plan, and I have to question whether management is being entirely candid with shareholders as to the company's real problems.

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http://stocks.investopedia.com/stock-analysis/2012/Summer-Infant-Still-Colicky-SUMR-HAS-MAT-NWL0815.aspx

Seeking Alpha: Summer Infant Creating A Summer Of Discontent

Experienced growth stock investors know to expect a few bumps and bruises along the way, but the lack of growth at Summer Infant (SUMR) is starting to put the company's very status as a "growth stock" in serious question. Companies with a truly standout array of products find a way to grow in even the toughest of times, and management's go-to strategy of blaming a challenging retail environment is frankly wearing thin.

I liked this stock about four months ago, and thought aggressive investors could look past some of the issues with margins, debt, and organic growth. At this point, I am wrong, Wrong, and WRONG about this stock. Although I can still see a path to better results and returns, it would frankly take a leap of faith to buy the stock here ahead of actual improvement in organic growth.

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Summer Infant Creating A Summer Of Discontent

Seeking Alpha: Summer Infant An Early Stage Growth Story

Although investment writers often seem to hate growth-by-acquisition roll-up stories, there's a reason that they keep popping up in the market – when executed properly, they can work very well. Investors can look at stories as varied as Danaher, BB&T, or Helen Of Troy (Nasdaq: HELE) and see a similar theme of success through repeated M&A activity.

It may be unfair to suggest that Summer Infant (Nasdaq: SUMR) has only grown by virtue of folding in smaller makers of kid-oriented products, but the fact remains that the company is what it is today because of deals. Looking out a few years, though, it's not too hard to see how Summer Infant can grow itself into a real contender next to Mattel's (NYSE: MAT) Fisher-Price or Newell Rubbermaid's (NYSE: NWL) Graco business. Consequently, the company's downward revision in Q4 results is upsetting, but not the end of the story.

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Summer Infant: An Early Stage Growth Story

Investopedia: Industrial Slowdown? Not At Fastenal

If the economy really is teetering into a recession again, it is despite relatively encouraging rail traffic numbers and fairly strong sales trends at industrial suppliers. While Fastenal (Nasdaq:FAST) is unquestionably tied to trends in GDP and industrial activity, investors who overlook the consolidation and market share growth potential of this name do so at their own risk.

Earnings Still Growing at a Fast Pace  
Fastenal has more than one wind at its back, and the company has translated this into very solid growth during this economic recovery. For the third quarter, revenue grew 20% and slightly exceeded analyst expectations - a performance all the more impressive as the company routinely reports monthly sales figures. That said, there was some growth deceleration in September (growth was below 19% year on year), so investors should assume that analysts on the wrong side of this story will try to use that tidbit to validate continued pessimism.

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http://stocks.investopedia.com/stock-analysis/2011/Industrial-Slowdown-Not-At-Fastenal-FAST-GWW-HD-WCC-AXE-HWCC-DXPE1017.aspx

Investopedia: Helen Of Troy Still Looking Fetching

Every experienced investor has a stock or two that they have followed seemingly forever but have never actually owned. Houseware and personal care product manufacturer Helen Of Troy (Nasdaq:HELE) is one of those for me. Apart from some issues with executive compensation, I have liked this consolidator and low-cost operator and have often seen it as an undervalued and unduly ignored player in a stable market. And yet, I always seem to manage to find some excuse not to own it at any given time. 


Perhaps now is the time. With fiscal first quarter results in hand, it looks as though the company's core businesses are doing fine but that there is still substantial opportunity to improve the cost structure of the newly-acquired Kaz business and find still more consolidation opportunities.

A Mixed Bag in Fiscal Q1
It will be interesting to see how Wall Street chooses to process and interpret Helen of Troy's fiscal first quarter results. On one hand, the top line was quite strong. Revenue grew by almost 70% on a reported basis, with the company's largest segment (Personal Care) growing more than 9%. Housewares revenue grew more than 10%, while the Healthcare/Home unit saw revenue growth of about 7% on a pro forma basis. Working back through the numbers, it would seem as though underlying organic revenue growth was better than 9% this quarter and the company did surpass the high end of analyst expectations. 



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http://stocks.investopedia.com/stock-analysis/2011/Helen-Of-Troy-Still-Looking-Fetching-HELE-PG-SPB-WMT-TGT0708.aspx

Another Great Deal For Helen Of Troy

I have followed and written about consumer products company Helen of Troy (Nasdaq:HELE) for a long time, and yet I still find myself surprised at how the company operates. Simply put, this company just has a knack for finding attractive deals and pulling the trigger - common sense would dictate that other would-be rivals would look around and see the same business conditions and compete against these accretive opportunities for Helen of Troy. 

The Latest
Helen of Troy's stock spiked on Thursday on the company's announcement that it would be buying consumer products company Kaz for $260 million - a purchase that the company will fund largely out of debt. A privately-held company, Kaz sells a wide range of products in the personal care and houseware space, including air purifiers, fans, thermometers and humidifiers. Although the company has some of its own brands, a lot of Kaz's sales come from licensed brands like Vicks and Braun [both from Procter & Gamble (NYSE:PG)] and Honeywell (NYSE:HON). That is almost a perfect match for how HELE operates, and the two companies should fit together exceptionally well.

Solid Financial Reasons For The Deal
According to HELE, Kaz is on track to produce about $400 million in sales. That suggests an exceptionally good valuation on the deal, though on a price-sales basis, it is not much different than the valuations on companies like Newell Rubbermaid (NYSE:NWL), Jarden (NYSE:JAH) or Lifetime Brands (Nasdaq:LCUT). What is interesting about that comparison, though, is that all of those companies also have rather low returns on capital. That raises the question of just how well-run Kaz is and if HELE is buying a problem. (For related reading, check out How To Use Price-To-Sales Ratios To Value Stocks.)

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http://stocks.investopedia.com/stock-analysis/2010/Another-Great-Deal-For-Helen-Of-Troy-HELE-PG-HON-JAH-LCUT-NWL-CL1213.aspx