One-glance verdict
Undervalued
$24.86 our estimate vs market $8.08
Wall Street consensus: $9.49 (-61.8% lower than our fair-value estimate)
67% below our estimate, below the bear case
Fundamentals snapshot
Canada Goose Holdings Inc.
GOOS · NYQ · Consumer Cyclical · Apparel Manufacturing
Current price
$8.08
52-week range
$7.36 - $14.60
Market cap
$789.10M
Balance sheet
Stretched
2.25x Stretched
Net debt $443.70M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
1 Risk
2 rewards · 1 risks
- Reward Revenue grew 13.3% last year.
- Reward Free cash flow was positive in 4/10 years.
- Risk Operating margin compressed from 12.1% to -87.3% over 3 years.
What this company does
Canada Goose Holdings Inc.
Canada Goose makes fancy warm coats and other clothing for everyone, from babies to adults. Most of their sales come from selling directly to customers through their own stores and website, which helps them keep more of the money from each sale (this relates to their profit margins). This direct approach is important because it gives them better control over how their brand is presented and how much profit they make.
How the company got here
Canada Goose was founded in 1957 in a small Toronto warehouse by Sam Tick, originally under the name Metro Sportswear Ltd., making wool vests, raincoats, and snowmobile suits. His son-in-law, David Reiss, joined in the 1970s and introduced a machine for filling jackets with down, a key innovation. The company later became known as Snow Goose and then Canada Goose, gaining a reputation for outfitting scientists in Antarctica and the first Canadian to summit Mt. Everest. In 2001, David's son, Dani Reiss, took over as CEO and made the pivotal decision to produce only under the Canada Goose brand and exclusively in Canada, transforming it from a small manufacturer into a global luxury brand. The company went public in 2017, listing on the New York and Toronto Stock Exchanges.
What it actually does
Canada Goose is best known for its high-quality, very warm winter jackets, often seen with a distinct red, white, and blue circular patch on the arm. While famous for its heavy-duty parkas designed for extreme cold, the company also sells a wider range of clothing for less severe weather. This includes lighter jackets, raincoats, fleece, and knitwear. Beyond coats, they now offer other items like footwear, hats, scarves, and gloves to be a year-round brand.
Direct-to-Consumer (DTC)
This is the company's largest and fastest-growing business segment, making up the majority of its sales. It means that Canada Goose sells its products directly to customers through its own channels, rather than relying on other stores. This includes their official website and their own branded physical retail stores, which are often located in luxury shopping areas. Selling directly allows the company to have more control over its brand image and pricing, and it generally results in a higher profit margin (the amount of profit made on each sale) because they don't have to share the revenue with a middleman.
Wholesale
This part of the business involves selling products in bulk to other retailers, such as high-end department stores and specialty shops. These partner stores then sell Canada Goose items to their own customers. This allows the brand to reach customers in places where it doesn't have its own stores. While still a significant part of the business, the company has been deliberately shrinking its wholesale operations to focus more on its more profitable Direct-to-Consumer channel.
Other
This is the smallest segment of the company's business. It includes various other sources of revenue that don't fit into the main direct-to-consumer or wholesale categories. This can include sales to businesses or other miscellaneous income streams.
What management is betting on now
The company's main focus is to continue growing its Direct-to-Consumer (DTC) business, with a goal for it to make up about 80% of total sales. A key part of this strategy is to more than double its number of physical retail stores worldwide. They are also working to expand their product lines beyond the famous heavy winter coats to include more items for different seasons, like footwear and lightweight apparel, to make the brand relevant all year. Another priority is to grow their customer base, with a particular focus on attracting more women and younger shoppers (Gen Z).
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $24.86 vs current price $8.08
Wall Street consensus is the average analyst price target: $9.49 (-61.8% lower than our fair-value estimate).
Our most-likely fair value is $24.86 a share — about 207.7% above today's price of $8.08, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Stretched
Net debt $443.7M. Interest coverage 2.3x.
Net debt
$443.70M
Interest coverage
2.25x
Canada Goose Holdings Inc.'s profit covers its interest bill about 2.3 times over.
Stretched
Worse cushion
Baseline
Better cushion
GOOS
BASELINE
Canada Goose Holdings Inc.
Total debt $590.23M Interest coverage 2.25x This is the baseline the peer rows are being compared against.
Total debt $4.95B Interest coverage 3.64x +62% vs GOOS Carries about 1.6x more debt cushion than GOOS.
Total debt $461.24M Interest coverage 13.21x +486% vs GOOS Carries about 5.9x more debt cushion than GOOS.
Total debt $472.33M Interest coverage 499.17x +22,048% vs GOOS Carries about 221.5x more debt cushion than GOOS.
Total debt $1.39B Interest coverage 1.01x -55% vs GOOS Carries about 2.2x less debt cushion than GOOS.
What you should know
The case for and against GOOS
2 Rewards
1 Risk
Rewards
-
Revenue grew 13.3% last year.
-
Free cash flow was positive in 4/10 years.
Risks
-
Operating margin compressed from 12.1% to -87.3% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
19.71x
Forward P/E
9.86x
P/B
2.12x
P/S
0.51x
EV/EBITDA
5.79x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
69.7%
Operating margin
-87.3%
Net margin
3.7%
ROE
12.2%
ROA
7.9%
Health
Liquidity and balance-sheet strength
Debt / equity
1.53x
Current ratio
2.33x
Quick ratio
0.87x
Total debt
$590.23M
Total cash
$146.53M
Growth
How the business has been compounding
Revenue TTM
$1.09B
Revenue 5Y CAGR
7.9%
EPS TTM
0.41
EPS 5Y CAGR
-30.7%
Cash flow
How much cash the business throws off
Operating CF TTM
$135.91M
Free CF TTM
$100.14M
FCF margin
9.2%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
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