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Figs (NYSE:FIGS) stock, a supplier of scrubs to the medical industry, dropped 2% on Friday despite beating earnings in its Q3 report -- but don't fret. Figs is bouncing back this morning, up 7.8% through 10:20 a.m. ET and, in fact, trading 5% above where it stood before reporting earnings.
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Figs grew its sales 26% year over year to $190.7 million in Q3, beating analyst forecasts for $182.8 million. Earnings of $0.10 per share were $0.03 better than the analyst estimate of $0.07 -- and twice the nickel Figs earned in Q3 last year.
Sales in the company's core scrubs business grew a fine 24% year over year, while the company saw faster growth in newer businesses -- non-scrubwear clothing, where sales grew 35%, and international sales, where sales soared 51%.
Figs furthermore held operating cost growth to less than 14%, dramatically expanding profit margins. On the bottom line, Figs netted 10.1% of each $1 sold as profit.
Figs enters Q4 with "sustainable top- and bottom-line momentum as we look ahead to 2027," says CEO Trina Spear, although the company's CFO is forecasting only 15% sales growth in the quarter -- much slower growth than Figs saw in Q3. This may be what worried investors last week, and caused the share price to slip Friday.
Still, the company is looking to close out 2026 with 23.5% revenue growth, and earnings growth probably much stronger than that. At a price-to-earnings ratio of 52x, Figs stock isn't exactly cheap, but if it keeps growing like it's going, Figs stock just might still be a buy.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Figs. The Motley Fool has a disclosure policy.
Why Figs Stock Popped Today was originally published by The Motley Fool
