Outdoor lifestyle and equipment company Clarus (NASDAQ:CLAR) beat Wall Street’s revenue expectations in Q4 CY2024, but sales fell by 6.7% year on year to $71.41 million. On the other hand, the company’s full-year revenue guidance of $255 million at the midpoint came in 10.8% below analysts’ estimates. Its non-GAAP loss of $0.08 per share was significantly below analysts’ consensus estimates.
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Clarus (CLAR) Q4 CY2024 Highlights:
- Revenue: $71.41 million vs analyst estimates of $69.62 million (6.7% year-on-year decline, 2.6% beat)
- Adjusted EPS: -$0.08 vs analyst estimates of $0.09 (significant miss)
- Adjusted EBITDA: $4.35 million vs analyst estimates of $4.15 million (6.1% margin, relatively in line)
- Management’s revenue guidance for the upcoming financial year 2025 is $255 million at the midpoint, missing analyst estimates by 10.8% and implying -3.5% growth (vs -7% in FY2024)
- EBITDA guidance for the upcoming financial year 2025 is $15 million at the midpoint, above analyst estimates of $14.62 million
- Operating Margin: -70.2%, down from -13.2% in the same quarter last year
- Market Capitalization: $165 million
Management Commentary“During 2024 we remained focused on executing against our strategic roadmap and positioning Clarus for profitable growth over the long term,” said Warren Kanders, Clarus’ Executive Chairman.
Company Overview
Initially a financial services business, Clarus (NASDAQ:CLAR) designs, manufactures, and distributes outdoor equipment and lifestyle products.
Leisure Products
Leisure products cover a wide range of goods in the consumer discretionary sector. Maintaining a strong brand is key to success, and those who differentiate themselves will enjoy customer loyalty and pricing power while those who don’t may find themselves in precarious positions due to the non-essential nature of their offerings.
Sales Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Unfortunately, Clarus’s 2.9% annualized revenue growth over the last five years was weak. This was below our standards and is a tough starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Clarus’s history shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 20.5% annually. 
This quarter, Clarus’s revenue fell by 6.7% year on year to $71.41 million but beat Wall Street’s estimates by 2.6%.
Looking ahead, sell-side analysts expect revenue to grow 9.1% over the next 12 months. While this projection indicates its newer products and services will fuel better top-line performance, it is still below the sector average.
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Operating Margin
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Clarus’s operating margin has shrunk over the last 12 months and averaged negative 16.6% over the last two years. Unprofitable consumer discretionary companies with falling margins deserve extra scrutiny because they’re spending loads of money to stay relevant, an unsustainable practice.
In Q4, Clarus generated a negative 70.2% operating margin. The company's consistent lack of profits raise a flag.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Sadly for Clarus, its EPS declined by 16.2% annually over the last five years while its revenue grew by 2.9%. This tells us the company became less profitable on a per-share basis as it expanded.
In Q4, Clarus reported EPS at negative $0.08, in line with the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast Clarus’s full-year EPS of negative $0.08 will reach break even.
Key Takeaways from Clarus’s Q4 Results
It was encouraging to see Clarus beat analysts’ revenue expectations this quarter. We were also glad its full-year EBITDA guidance exceeded Wall Street’s estimates. On the other hand, its full-year revenue guidance and EPS fell short. Overall, this was a weaker quarter. The stock traded up 4.1% to $4.45 immediately after reporting.
Should you buy the stock or not? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
