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Delta Apparel (DLA) Stock Jumps 9%: Will It Continue to Soar?

Delta Apparel (DLA) saw its shares surge in the last session with trading volume being higher than average. The latest trend in earnings estimate revisions may not translate into further...

This story originally appeared on Zacks

Delta Apparel (DLA) shares soared 9% in the last trading session to close at $27.01. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 8.9% loss over the past four weeks.

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Delta Apparel’s shares rallied on impressive preliminary results for fourth-quarter fiscal 2021.  The company highlighted that it expects quarterly net sales to be nearly $114 million, reflecting a year-over-year increase of almost 6%. The company’s Delta Group sales in the quarter went up 5% driven by strength in custom and retail-direct business. Solid consumer demand for Salt Life brand led to double-digit growth across Salt Life retail doors as well as wholesale channel during the quarter. Excluding a valuation gain on contingent consideration, management anticipates fiscal fourth-quarter earnings per share to grow more than 20%. Delta Apparel’s quarterly performance reflects strength in its strategic model, which is designed to service diversified sales channels. Management also unveiled that it envisions fiscal 2021 net sales to grow nearly 14% year-over-year.

This maker of branded and private-label apparel is expected to post quarterly earnings of $0.65 per share in its upcoming report, which represents a year-over-year change of -8.5%. Revenues are expected to be $113.4 million, down 2.8% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Delta Apparel, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on DLA going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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