Escalade Inc (NASDAQ: ESCA)

Sector: Consumer Cyclical Industry: Leisure CIK: 0000033488
Market Cap 197.13 Mn
P/B 2.10
P/E 15.43
P/S 1.29
ROIC (Qtr) 7.32
Div Yield % 4.06
Rev 1y % (Qtr) 0.07
Total Debt (Qtr) 21.62 Mn
Debt/Equity (Qtr) 0.13
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About

Escalade Inc., often recognized by its stock symbol ESCA, is a prominent player in the sporting goods industry, manufacturing and distributing a wide range of products such as sporting goods, recreational items, and fitness equipment. The industry is highly competitive and fragmented, with Escalade's main business activities encompassing design, manufacturing, and distribution of products including archery equipment, basketball goals, billiards tables, fitness equipment, and outdoor games. Escalade's revenue generation is primarily through the...

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Investment thesis

Bull case

  • Strong operating cash flow of 28.41M provides robust 1.31x coverage of total debt 21.62M, indicating excellent debt servicing capability and financial flexibility.
  • Strong tangible asset base of 164.50M provides 7.61x coverage of total debt 21.62M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 28.41M provides exceptional 29.35x coverage of interest expenses 968000, showing strong debt service capability.
  • Operating cash flow of 28.41M provides strong 12.84x coverage of stock compensation 2.21M, indicating sustainable incentive practices.
  • Robust free cash flow of 26.80M exceeds capital expenditure of 1.61M by 16.61x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 28.41M barely covers its investment activities of (3.41M), with a coverage ratio of -8.32, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 3.51M against inventory of 80.66M, the 0.04 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 28.41M provides thin coverage of dividend payments of (8.29M) with a -3.43 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 3.51M provide limited coverage of acquisition spending of (1.80M), which is -1.95x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Free cash flow of 26.80M represents just -2.89x of debt issuance (9.26M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Contract with Customer, Sales Channel Breakdown of Revenue (2024)

Peer comparison

Companies in the Leisure
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 AS Amer Sports, Inc. 22.38 Bn 71.89 3.67 1.87 Bn
2 HAS Hasbro, Inc. 13.30 Bn 46.47 3.26 3.32 Bn
3 PLNT Planet Fitness, Inc. 7.78 Bn 37.79 6.04 2.58 Bn
4 GOLF Acushnet Holdings Corp. 7.40 Bn 80.24 4.75 0.90 Bn
5 LTH Life Time Group Holdings, Inc. 6.29 Bn 21.85 2.16 4.13 Bn
6 MAT Mattel Inc /De/ 5.43 Bn 12.57 1.04 2.59 Bn
7 YETI YETI Holdings, Inc. 3.97 Bn 24.75 2.17 0.22 Bn
8 MSGE Madison Square Garden Entertainment Corp. 2.95 Bn 56.80 2.91 1.20 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.89 1.19
EV to Cash from Ops. EV/CFO 12.95 -6.09
EV to Debt EV to Debt 9.58 14.49
EV to EBIT EV/EBIT 11.09 -159.90
EV to EBITDA EV/EBITDA 12.25 -4.06
EV to Free Cash Flow [EV/FCF] EV/FCF 18.63 0.74
EV to Market Cap EV to Market Cap 1.05 -0.64
EV to Revenue EV/Rev 1.36 4.65
Price to Book Value [P/B] P/B 2.10 4.75
Price to Earnings [P/E] P/E 15.43 12.00
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.53 -0.51
Dividend Payout Ratio % Div Payout % (Qtr) 65.20 3.11
Dividend per Basic Share Div per Share (Qtr) 0.60 0.22
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 30.91 6.13
Interest Coverage Int. cover (Qtr) 18.85 -30.68
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -141.43 -13.50
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 723.71 1,190.33
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 13.88
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -13.30 -111.75
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -12.74 -165.31
EBIT Growth (1y) % EBIT 1y % (Qtr) -10.81 -1,562.20
EBT Growth (1y) % EBT 1y % (Qtr) -0.67 -1,555.34
EPS Growth (1y) % EPS 1y % (Qtr) -4.17 -377.44
FCF Growth (1y) % FCF 1y % (Qtr) -44.49 10.93
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 1.69 17.65
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.04 0.73
Cash Payout Ratio Cash Payout (Qtr) 0.28 0.07
Cash Ratio Cash Ratio (Qtr) 0.08 3.31
Current Ratio Curr Ratio (Qtr) 3.30 4.80
Debt to Equity Ratio Debt/Equity (Qtr) 0.13 2.35
Interest Cover Ratio Int Coverage (Qtr) 18.85 -30.68
Times Interest Earned Times Interest Earned (Qtr) 18.85 -30.68
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 9.70 -57.55
EBIT Margin % EBIT Margin % (Qtr) 7.56 -65.38
EBT Margin % EBT Margin % (Qtr) 7.16 -69.55
Gross Margin % Gross Margin % (Qtr) 26.20 46.51
Net Profit Margin % Net Margin % (Qtr) 5.30 -74.45