Rocky Brands stock rating upgraded by Baird on strong brand performance

Investing.com - Baird upgraded Rocky Brands (NASDAQ:RCKY) from Neutral to Outperform on Tuesday, raising its price target to $40.00 from $30.00. The stock, currently trading at a P/E ratio of 11x and showing strong momentum with a 32% return over the past six months, appears undervalued according to InvestingPro analysis.

The upgrade follows Rocky Brands’ impressive second-quarter performance, which showed 7.5% revenue growth, significantly exceeding Baird’s 2.5% estimate, while EBIT increased by 51%. The company maintains solid financial health with a current ratio of 2.76x and an Altman Z-Score of 3.73, indicating strong financial stability.

Baird highlighted strong growth across several of the company’s brands, with XTRATUF growing at strong double-digit rates, Durango at high single digits, and Muck showing double-digit growth in women’s products and mid-single-digit growth in men’s lines. With a gross profit margin of 40.5% and maintaining dividend payments for 13 consecutive years, InvestingPro subscribers can access 8 additional key insights about Rocky Brands’ financial performance.

Despite facing approximately $11 million in gross tariff headwinds expected in the second half of 2025, Rocky Brands has maintained its guidance, which Baird suggests could prove conservative as pricing strategies (estimated at approximately 6%) and production shifts help offset these challenges.

Baird indicated that Rocky Brands could potentially achieve 2025 earnings per share of $3.20 or higher in a favorable scenario, with further upside possible if macroeconomic conditions improve for 2026, though it noted the company’s approximately $200 million market capitalization currently limits investment appeal.

In other recent news, Rocky Brands reported second-quarter earnings that significantly exceeded analyst expectations. The company posted adjusted earnings of $0.55 per diluted share, more than double the projected $0.25 per share. Revenue also saw an increase, climbing 7.5% year-over-year to $105.6 million, surpassing the consensus estimate of $102.54 million. These results highlight a strong performance across Rocky Brands’ portfolio. Additionally, Rocky Brands announced a quarterly cash dividend of $0.155 per share, which will be paid on September 16, 2025, to shareholders of record as of September 2, 2025. The company’s board of directors approved this dividend, reflecting confidence in its financial health. These recent developments underscore Rocky Brands’ robust financial position and commitment to returning value to shareholders.

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