image courtesy SRAM.com
SRAM is preparing to go public which means individual investors may soon have the chance to own shares in the bike component maker. Recent documents filed with the SEC reveal some interesting facts about the world’s #2 bike component maker:
- From 2006 to 2010, SRAM grew revenues about 17% per year to more than half a billion dollars in 2010.
- The company improved operating margins from 8% to 19% which points to increasing profit margins.
- Net earnings (profit) in 2010 were $50 million.
- OEM sales (i.e. sales of components to bike manufacturers) are roughly 67%. The other third of sales are aftermarket sales (upgrades).
- Aftermarket sales are increasing and the company credits improved marketing.
Beyond the big picture numbers, the company points out that 50% of 2010 sales came from products less than 3 years old. SRAM has nearly 300 employees dedicated to product development alone which drives innovation in the product line. Along those lines, the company holds 550 patents – pretty impressive for a company that deals primarily in bikes which have been around for centuries.
The company estimates it has about 15% of the global bike component market, second only to Shimano. Still, it’s a big pie – $3.5 billion in bicycle component sales last year.
As an armchair investor I’d be tempted to give this one several months on the market before considering buying shares. US bike companies that have gone public in the past have typically disappointed but who knows, maybe SRAM will be different. At least if you own a few shares you won’t feel so bad when you drop a couple Gs on a new groupo for your mountain bike – some of that money might come right back to you. 🙂
4 Comments
May 17, 2011
SRAM just bought Quarq, a bicycle power metering company and they cliam backordering fo their products due to overwhelming demand.
Last thread I read about what shifting setup to buy trashed Shimano (though I use and like it) and praised SRAM, almost unanimously.
May 14, 2011
$3.5 billion annually in components?! The bike industry is bigger than I thought it was!
May 17, 2011
May 16, 2011