RCKY

AI Memo

Rocky Brands

As of 2026-05-04/Confidence medium/Horizon 6‑12m

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Data freshness

AI Memo

As of 2026-05-04 • Model: RankAlpha Sentiment Codex

Decision Panel

Action, confidence, horizon, and decision blockers at a glance.

Action

—

Confidence

medium

Horizon

6‑12m

Key catalyst

Capital returns can support the small-cap setup if cash flow holds • 2027-02-23

Expected move: +9%

Biggest risk

The bear case is that Q1 showed how fragile earnings remain when tariffs hit sourcing costs: sales grew but adjusted EPS fell to $0.24 from $0.73, and investors still need proof that margin recovery will actually arrive before the sales momentum cools.

Invalidation

Break below $30 or thesis failure.

What would change my mind?

The bull case is that Rocky is carrying real top-line momentum into 2026, with XTRATUF and Muck strength, faster retail/DTC growth, lower debt than a year ago, and a plausible path back toward low-40% gross margin once tariff pressure eases and sourcing actions catch up.

Research note

Recommendation

—

Confidence

medium

As of

2026-05-04

Base target

$42

p=45%

Bull target

$48

p=30%

Bear target

$30

p=25%

Key bullets

Fast scan of bull, bear, and watch items

BullKey bullets

Q1 sales momentum must translate into margin recovery
Retail and direct-to-consumer mix remains the main structural earnings lever
The bull case is that Rocky is carrying real top-line momentum into 2026, with XTRATUF and Muck strength, faster retail/DTC growth, lower debt than a year ago, and a plausible path back toward low-40% gross margin once tariff pressure eases and sourcing actions catch up.

BearKey bullets

Inventory remains elevated in absolute terms at $172.6 million as of March 31, 2026, so any demand slowdown or channel disruption could pressure markdowns and cash conversion [#8-K-2026-04-28].
Leverage is still meaningful for the size of the business, with total debt around $122.2 million at March 31, 2026 and only $1.7 million of cash, limiting room for error if margins stay compressed [#8-K-2026-04-28].
Tariff and sourcing-cost pressure is the clearest near-term risk after Q1 gross margin fell to 36.5% and management cited about $7.1 million of tariff-related costs in the quarter [#8-K-2026-04-28].

WatchKey bullets

Capital returns can support the small-cap setup if cash flow holds

Summary

High-level snapshot

Recommendation

Model confidence

medium

Timeframe

6‑12m

Asset

Equity

Trigger

Base case: $42 (p=45%)

Bull/Bear spread: +25% / -22%

Vs latest close: Bull +25% · Base +9% · Bear -22%

Scenario probabilities

Bull Target: $48 (p=30%)Base Target: $42 (p=45%)Bear Target: $30 (p=25%)

Commentary

Primary evidence supports a cautious-positive monitoring view rather than a full bullish call. News flow is active because of the April 28, 2026 earnings release, but the tone is mixed: revenue growth and retail momentum are encouraging, while tariff-driven margin compression sharply reduced EPS. Social-context coverage was not provided in the packet, and visible analyst-revision evidence is limited, which lowers conviction despite the positive directional prior in the deterministic score.

As of 2026-05-04 • Updated bi-weekly / post-earningsSource: Internal modelMethodology

Analyst Summary

Thesis highlights from the latest analysis

Bull Case

Bear Case

Drivers

Scannable catalysts and supporting factors

Q1 sales momentum must translate into margin recovery
Retail and direct-to-consumer mix remains the main structural earnings lever

Scenarios

Bull Target (Scenario probability)

$48 / p=30% prob

Base Target (Scenario probability)

$42 / p=45% prob

Bear Target (Scenario probability)

$30 / p=25% prob

Price $38 as of 2026-06-02

Nearest Scenario: Base (∆ 9%)

Targets vs latest close: Bull +25% · Base +9% · Bear -22%

Sentiment & Exposure

News Sentiment (30d)

0.18

Social Sentiment (7d)

0.00

Events

Other notable items detected

EVENT2027-02-23
Capital returns can support the small-cap setup if cash flow holds
The board authorized a new $7.5 million share repurchase program on February 24, 2026, running through February 23, 2027. For a company with roughly $216.7 million market cap, buybacks can matter, but follow-through depends on maintaining operating improvement while carrying more than $122 million of debt [#PR-2026-02-24].
Prob 50.00% • Move 8.00% • Priced-in 35.00%

Short-term Catalysts

Next few weeks

Q1 sales momentum must translate into margin recovery
2026-08-01
First-quarter 2026 net sales rose 9.1% to $124.4 million, led by retail up 16.5% and wholesale up 4.8%, but gross margin fell 470 bps to 36.5% as tariff-related sourcing variances increased by about $7.1 million. Management said tariff pressure should lessen in Q2 and pointed to a path back toward gross margin in the low-40% range later in the year, making the next few months a key proof point for earnings recovery [#8-K-2026-04-28].
Prob 60% • Move 12% • Priced-in 45%

Long-term Catalysts

Months to a year

Retail and direct-to-consumer mix remains the main structural earnings lever
2026-12-31
Rocky finished 2025 with retail segment sales up 20.5% to $152.9 million and said retail growth has been outpacing wholesale, driven by owned e-commerce sites and third-party marketplaces. The company also cited stronger retail mix and sourcing diversification through its manufacturing base as long-term margin tailwinds, which supports a constructive but still execution-dependent multi-quarter setup [#10-K-2026-03-11] [#PR-2026-02-24].
Prob 65% • Move 15% • Priced-in 40%

Risks

Inventory remains elevated in absolute terms at $172.6 million as of March 31, 2026, so any demand slowdown or channel disruption could pressure markdowns and cash conversion [#8-K-2026-04-28].
Leverage is still meaningful for the size of the business, with total debt around $122.2 million at March 31, 2026 and only $1.7 million of cash, limiting room for error if margins stay compressed [#8-K-2026-04-28].
Tariff and sourcing-cost pressure is the clearest near-term risk after Q1 gross margin fell to 36.5% and management cited about $7.1 million of tariff-related costs in the quarter [#8-K-2026-04-28].
The 10-K highlights exposure to tariffs, import controls, supply-chain disruption, weather sensitivity, and broader consumer-demand swings, all of which are important for a seasonal outdoor/work footwear portfolio [#10-K-2026-03-11].

Peers

Symbol	Summary
FOSL	Fossil is a closer branded-consumer comp than most packet peers because it also balances brand demand, wholesale exposure, and direct channels, but product category and balance-sheet profile differ materially.
LOVE	Lovesac offers a useful read-through on DTC mix and promotional discipline, though it is a furniture retailer rather than footwear, so peer relevance is only partial.
HBB	Hamilton Beach is mainly an adjacent small-cap consumer durable comp for inventory, sourcing, and tariff sensitivity rather than a direct footwear peer.

Sources

Internal and external references used in this analysis

Model source: RankAlpha Sentiment Codex
Analysis date: 2026-05-04

AI Stock Memo: RCKY - Rocky Brands - RankAlpha