Shares of Fila Holding SpA jumped more than $4 yesterday, reaching a new high after the Italian sportswear company with U.S. headquarters in Hunt Valley posted its seventh straight quarter of earnings higher than expected by analysts.
Fila Holding said third-quarter earnings jumped 28 percent, to $22.7 million, the equivalent of 91 cents per American depositary share (ADS). Sales hit $269 million.
The quarter brought the company's nine-month profit to $1.98 per ADS, only 24 cents lower than analysts who follow Fila believed the company would earn during the entire year.
Fila stock jumped nearly $5 to $49.125 before settling to close at $48.25, up $4. The run follows an ongoing surge that has lifted the shares from $15.50 at the end of September 1994.
"Once again, they beat our estimate by a nice margin," said Brenda Gall, a Merrill Lynch analyst who thought Fila would earn 82 cents a share. "The stock is the best performer in my 17-company universe of apparel companies. It's definitely earnings-driven."
But what caught analysts' eyes even more than the profit gains in this quarter was what the announcement, issued Wednesday evening, said about the months to come.
The company said its orders for delivery in early 1996 are 42 percent higher than those of a year ago, and that orders for the holiday season are so high that the company expects record fourth-quarter sales. More unusual than the prospect of good news is the company's confidence to say so publicly, since flopped predictions often result in lawsuits by disappointed investors.
The company said one reason for the probable record fourth-quarter sales is that Fila moved back the launch of the new edition of its basketball shoe endorsed by NBA All-Star Grant Hill, meaning that the demand for the shoe will be reflected in fourth-quarter figures.
"A lot of it is Grant Hill," said Gary Jacobsen, an analyst at BT Securities in New York, a unit of Bankers Trust. The Detroit Pistons forward is Fila's best-known product endorser, and the company rolled out a new edition of "The Hill" shoe early in the fourth quarter, a follow-up to a breakthrough product that sold more than 1 million pairs earlier this year.
The company said it also had very strong sales growth in its apparel lines and its international markets for athletic shoes. Both apparel and international grew faster than did Fila's core U.S. athletic shoe business.
Ms. Gall said she raised her estimates for Fila earnings through 1996 after the announcement. She now estimates that Fila will earn $2.35 a share this year, instead of $2.23.
Next year's estimate jumped to $2.85-$2.90 per share, from $2.65.
She said the stock still is not overpriced for a fast-growing company, despite the steep 15-month rise. Fila trades at less than 17 times estimated 1996 earnings. The Standard & Poor's 500-stock index closed yesterday at 16.6 times the earnings that S&P 500 companies have posted during the past four quarters.
About 58 percent of Fila's third-quarter sales were in the United States.