Summer Infant: Worth going gaga over

Crystal D. Vogt | Nov 21, 2007 12:41pm EST | Comment

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Summer Infant, Inc. (Nasdaq: SUMR)
Woonsocket, R.I.
http://www.summerinfant.com

52-week low / high: $3.91 / $5.71
Shares Outstanding: 13.91 million
Market Capitalization: $71.07 million

With the coming of any newborn, parents tend to childproof everything, from cupboard doors to staircases, to ensure the safety of their little one. But what about childproofing your next investment? Summer Infant, Inc. (Nasdaq: SUMR) could be the answer for both parents and investors alike.

The Woonsocket, R.I.-based company designs, markets and distributes health, safety and wellness products catering to the 0- to 3-year-old crowd. Summer Infant’s merchandise is mainly sold to large U.S. retailers, including Wal-Mart, Target, Toys ‘R’ Us and Amazon. The company’s over 60 product categories include nursery audio and video monitors, safety gates, durable bath products, bed rails, infant thermometers and related health and safety products, booster and potty seats, soft goods, bouncers, strollers, high chairs and swings—all must haves for the prudent parent.

Founded in 2001, Summer Infant, like the tykes they cater to, has seen remarkable growth.

In the third quarter ended Sept. 30, 2007, net revenues were $21.20 million, up 55%, from $13.68 million in the third quarter of 2006. The small cap attributes the recent growth to new product introductions and the addition of new customers, and adds that its products are produced using contract manufacturers in China and the United States. By outsourcing manufacturing, the company sustains rapid growth with little investment in production assets. Summer Infant’s strongest growth categories are video monitors, gates and bath products.

Net income for the third quarter of 2007 was $1.1 million, or $0.08 a share, compared with $558,000, or $0.05 a share in the year-ago quarter, while gross profit was $7.97 million, a 47.1% increase from $5.42 million in the third quarter of 2006. The small cap’s EBITDA for the third quarter of 2007 was $2.6 million, a 69.3% increase from the $1.33 million reported in the year-ago quarter.

Along with the release of third quarter financials, Summer Infant reiterated 2007 revenue and EBITDA guidance of $70 to $75 million and $7.5 to 8 million, respectively.

Since its conception earlier this decade, Summer Infant has grown from five employees to a current 100 and recently opened a $4-million, 52,000-square-foot building in Rhode Island. With infant products in constant demand, this small cap will most surely run—not crawl—toward even more growth in the future.

Note: Summer Infant (Nasdaq: SUMR) is on the “Watch List” of Rising Star Stocks, a subscription investment newsletter from Business Financial Publishing, which also publishes SmallCapInvestor.com. As a Watch List company, Summer Infant displays many characteristics found in successful stock winners, and is being closely monitored for possible inclusion in the Rising Star Stocks portfolio at a later date.