ROCKY BRANDS INC (RCKY)

[Emerging Growth]

At EmergingGrowth.com... Competition could be tough in the corporate world. There are occasions when a new business model disrupts the current ecosystem. Suddenly, the industry leader is caught unprepared leading to its demise. However, there are businesses that have constantly adapted to the ever-changing competitive landscape. That’s what Rocky Brands (NASDAQ: RCKY) did.

Based in Nelsonville Ohio, Rocky Brands designs, manufactures and markets footwear and apparel under a portfolio of brand names such as Rocky, Georgia Boot, Durango, Lehigh and other licensed brands Michelin and Mossy Oak. The company has been around since 1932, although it was called William Brooks Shoe at that time and was named after its founder.

At present, it has 10,000 retail store locations in the United States and Canada. It also does business through its website, rockybrands.com. Its largest clients include Tractor Supply Co. (NASDAQ: TSCO), Bass Pro, Dick’s Sporting Goods (NYSE: DKS) and AAFES.

Over the last 4 years, its net income has grown from $1.17 million to $8.31 million. In the recent quarter, it reported sales of $62.9 million, an increase of 4.5% compared to the same period last year. Operating income amounted to $7.9 million, or operating margin of 10.9%. This is slightly higher than the previous year’s operating income of $7.6 million and margin of 10.7%. Overall, net income reached $5.4 million, an increase of 4% compared to the prior year.

For the fiscal year 2013, analysts expect Rocky Brand to post earnings per share of $1.63. This translates to per share earnings growth of 19%, higher than the forecasted 5-year average growth rate of 10%. In contrast, K-Swiss (NASDAQ: KSWS) is forecasted to post per loss of $0.07 for the same period. For the next 5 years, analysts are more bullish over the latter’s prospects with an estimated net income growth of 19%. Another peer, Skechers (NYSE: SKX)is estimated to register earnings per share of $0.85 for the current fiscal year. This is double than the prior year’s results. Skechers is expected to post 15% growth for the next 5 years.