|Written by GSCR Staff|
|Thursday, 05 July 2012 09:06|
Ok, so we are a little late on this one. Still, there is plenty of room for upside, even at current levels. Mention Nautilus (NYSE – NLS - $3.61) and it is clearly a household name for many U.S. citizens. For the uninitiated, NLS is a consumer fitness company that provides the tools and education necessary to help people achieve a fit and healthy lifestyle. The Company owns a brand portfolio that includes Nautilus, Bowflex, Schwinn® Fitness, Universal and CoreBody Reformer. Nautilus manufactures and markets its line of innovative health and fitness products through direct, specialty retail, retail, and international channels.
So what makes NLS interesting today? First, the Company has shown that not only is it a survivor it can thrive with the proper direction. A few years ago, the Company was a bloated mess, with 2000 employees, $600 million in sales, no profitability, high debt, and a facing a consumer market that could not afford, or had an interest in, its products.
Since then, NLS has undergone a major restructuring, essentially reducing headcount by 60% and re-focusing its efforts and demographics. As a result, for 2011, NLS recorded its first profitable year since 2006. The stock just reached yet another new high today but the valuation still remains attractive. At current prices, the stock trades under 15x the FY12E EPS estimate of $0.26 and under 10x the FY13E EPS forecast of $0.38. The stock is a shoo-in to break the $4.00 level and we think it can be a $6.00 in a year’s time. NLS has $0.60 per share in cash and no long term debt.
With NLS, investors get to enjoy an unusual trifecta. The Company is a turnaround story, has a favorable valuation, yet it is a momentum play with steady volume.
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