Advertisements


3 Retailers That Defied First Quarter Headwinds

These Retailers Gave Positive Guidance For 2022 The takeaway from Q1 earnings for the retailers (NYSEARCA:XRT) is slowing growth and margin compression. Those factors have the sector down across verticals but not all retailers are feeling the same pain. Companies like Footlocker, V.F. Corporation, and Canada Goose were not only able to limit damage to […] These Retailers Gave Positive Guidance For 2022 The takeaway from Q1 earnings for the retailers (NYSEARCA:XRT) is slowing growth and margin compression. Those factors have the sector down across verticals but not all retailers are feeling the same pain. Companies like Footlocker, V.F. Corporation, and Canada Goose were not only able to limit damage to their margins but provide a positive forecast for the year. While we can’t promise conditions won’t worsen, we can say these high-quality apparel manufacturers are defying the odds and producing results. In two cases, at least, these stocks also offer high yields above 5% and stock repurchases as well. .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Footlocker Rises On Earnings Strength, Inventory Position Footlocker (NYSE:FL) had a mixed quarter of that there is no doubt. While revenue grew 1.4% over last year to $2.18 billion it missed the consensus estimate by 135 basis points. The key takeaway from the report, however, is the margin which contracted by only 80 basis points. The analysts were looking for a figure well into the triple digits so this is a significant beat and the results can be seen on the bottom line. The adjusted EPS of $1.60 beat the Marketbeat.com consensus by $0.05 and the guidance is very optimistic. The company is expecting to see revenue and EPS come in at the upper end of the previously stated ranges of 4% to 6% and 8% to 10%. Assuming demand for products holds up over the summer, the inventory position and expected supply chain improvement should pave a path to outperformance as well. "Following our solid results from the first quarter, our strong inventory position going into the remainder of the year, and our strengthening vendor relationships, based on our current visibility, we now expect to achieve the upper end of our revenue and earnings guidance for the full year,” said Footlocker CFO Andrew Page. V.F. Corporation Rises On Mixed Results V.F. Corporation’s (NYSE:VFC) calendar Q1/fiscal Q4 results were more mixed than Footlocker's but equally skewed to the upside. The owner of Vans and The North Face reported slim misses on both the top and bottom line but was able to successfully navigate the inflationary environment. While gross margin contracted by less than 100 basis points the decline was offset by a 210 bps improvement in GAAP operating margin and a 70 bps improvement in the adjusted margin. In light of the fact most segments outside of pandemically restricted Asia grew by double-digits, we think the 9.3% growth in revenue and earnings performance is pretty good. Looking forward, the company is expecting revenue growth in the range of 7% this year with significant margin expansion at the gross and operating levels. The operating margin is expected to nearly double in fiscal 2023 and will provide ample cash flow and FCF to fuel the buyback program and the 4.5% yield. Canada Goose Flies North On Positive Guidance Canada Goose (TSE:GOOS) had a good quarter and provided positive guidance for the year sending its shares up on the news. The company was able to grow revenue by 1.4% (6.8% FX neutral) on top of last year’s 64% increase to set a quarterly record. The revenue missed the consensus but by a very slim 16 basis points and margins were better than expected so we aren’t too concerned about that. The operating margin narrowed by 300 basis points but far less than what was expected due to pricing increases and channel mix. DTC sales increased by nearly 28% on a comp basis while bulk sales shifted to wholesalers and away from international distributors. The best news in the report, however, is the guidance which is expecting Q1 strength to carry into the end of the year. The company is expecting revenue in a range with the marketbeat.com consensus near the bottom and for EBIT margin near 19%. Article by Thomas Hughes, MarketBeat Updated on May 20, 2022, 5:47 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkMay 20th, 2022

Jefferies Top Five Stock Picks Get Physical

Earlier this week, analysts at Jefferies revealed their top 5 stock picks for the current volatile market environment. The CBOE volatility index, commonly known as the “VIX,” is a key measurement of expected future volatility based on S&P 500 index options. With medium term uncertainty at unprecedented levels and central banks starting to hike rates […] Earlier this week, analysts at Jefferies revealed their top 5 stock picks for the current volatile market environment. The CBOE volatility index, commonly known as the “VIX,” is a key measurement of expected future volatility based on S&P 500 index options. With medium term uncertainty at unprecedented levels and central banks starting to hike rates at excessive paces, it is more important now than ever for investors to look rebalance portfolios and find investments that can outperform bearish market movements. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Walter Schloss Series in PDF Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more The Jefferies report noted that with valuations depressed and fundamentals holding resilience, they believe the best ways are to invest in companies experiencing positive earnings revisions with compressed valuation. In the second half of 2022, the firm expects that some headwinds, such as inflated freight costs, should begin to subside but will likely be offset by markdowns in sales by companies. When challenges arise, opportunities may present themselves in other areas Jefferies sees potential growth opportunities for discount value retailers currently well positioned to gain market share as inflation pressures consumer spending. They also highlight that SaaS business models outperform with strong profitability and free cash flows. Although, companies with the highest earnings revisions have been Fitness related stocks whose forward estimates have risen over 25% higher since March. The three fitness names included in the key picks have robust growth pipelines and have successfully driven continued membership growth. The five picks across their coverage universe are ELY, EWCZ, FXLV, PLNT and XPOF. Callaway Golf Co (NYSE:ELY) Callaway is an American global sports equipment manufacturer and retailer of golf equipment, clothing and accessories. ELY's share price has sunk 47% after hitting a ten-year high of $37.75 in June 2021. ELY trades on a 28.5x price to earnings ratio, with expectations that the company will grow total sales by ~27% and profit (EBITDA) by ~22% in FY22. Following the most recent result, management announced a new $100 million share buyback that can be utilized at any time by the board. This allows management to create EPS accretion for shareholders by taking advantage of the depressed share price. Jefferies noted how Callaway continues to generate growth across its various businesses, which have benefited from sector tail winds in the Golfing industry. Jefferies attributes a $55 target on the stock. Fintel data analyzing the options market for the stock suggests there is bullish sentiment for the stock. From March to June, the put/call ratio (calculated by dividing all put options by call options) has drifted lower, currently at 0.61. ELY has a consensus 'buy' rating and a $35 target price, implying a 77% capital upside. The consensus target has retreated from highs above $40 in November 2021 but remains significantly above the share price, with a larger deviation in 2022. European Wax Center Inc (NASDAQ:EWCZ) European Wax Center is a major chain of hair removal salons that also offers waxing services and sells products for skin care, body, and eyebrow categories. EWCZ was initially listed on the Nasdaq in August 2021 with an IPO price of $17. Since listing, the company has traded with a wide share price range, gaining as much as 80% before erasing most gains but remaining 25% above the listing price. For the remainder of 2022, EWCZ expects to open 70-72 new stores and guided system wide sales of $875-915 million. The company is experiencing hypergrowth as it continues to roll out new centers, which somewhat justifies the forecast 54x FY22 end price to earnings ratio. Jefferies likes the firm's profitability with strong free cash flow driven by recurring revenue streams, giving the company a $41 target. EWCZ has a consensus 'overweight' rating and a $35.50 target price, implying a 66% capital upside. F45 Training Holdings Inc (NYSE:FXLV) F45 Training is an Australian franchise and fitness center operator that focuses on 45 minute group classes and is headquartered in Austin, Texas. The company has over 1,750 studios across 45 countries around the world. The company is trading on an FY22 forward price to earnings multiple of 7x and expects to double revenue over 2022. FXLV initially floated on the Nasdaq at $16 a share in July 2021 and has traded south since listing. In 2021, the company recorded a net loss of $182 million but was expected to generate a net profit of $60 million in 2022. The firm booked $2.5 million in net profit after tax in the previous quarter. On the same day, F45 announced they had obtained $150 million in the form of a financing facility to accelerate the expansion of the franchise in the US. The facility will be funded with debt financing, potentially increasing the facility to $300 million over time. Current franchisees and new prospects can apply for loan financing under the program to develop additional F45 studios from the current quarter. The Fintel platform gives FXLV an officer accumulation score of 81.28 based on an above-average share accumulation from insiders of the stock. Jefferies attributes a bullish target of $25 for the stock. FXLV has a consensus 'overweight' rating and a $14.22 target price, implying a 230% capital upside. Planet Fitness Inc (NYSE:PLNT) Planet Fitness is a North American operator of fitness centers with over 2,000 locations. PLNT has been a strong performing stock over a ten year time horizon with a share price that has traded broadly sideways for the last ~ three years. The company trades on a current price to earnings ratio of 96x but is forecast to fall to 39.9x at the end of 2022 and 29x at the end of 2023. PLNT is widely held by Fintel's retail investor base and rose seven spots in popularity this week to become the 29th most controlled security for those who have linked their portfolio to the platform. Jefferies likes the company's high profit and capital-light business model that generates strong cash flows. Following the Q1 result in May, the firm highlighted that member numbers grew to 16.2 million, reaching a new all time peak for the company. They remain positive on the stock with a target of $115. PLNT has a consensus 'overweight' rating and a $90.87 target price, implying a 48% capital upside. Xponential Fitness Inc (NYSE:XPOF) Xponential Fitness is a global franchise group of boutique fitness brands across the globe. XPOF was listed on the NYSE at $12 per share in late July 2021. The stock was extremely popular, rising over 100% in its first year of trading. XPOF has been unable to withstand the growth company derating this year and is trading on a ~41x forward FY22 price to earnings ratio. XPOF expects to open 500-250 new studios, growing total numbers by ~81% over 2022. Jefferies remains optimistic about Xponential's competitive position and an industry background where consumers prioritize health and wellness. The firm gives the stock a $30 target. XPOF has a consensus 'buy' rating and a $28 target price, implying a 112% capital upside. Article By Ben Ward, Fintel Updated on Jun 17, 2022, 3:57 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJun 18th, 2022

Is AutoNation (AN) Stock a Buy After Yesterday"s Price Dip?

Considering the industry's solid prospects and AutoNation's (AN) strong fundamentals, investors should see the latest price dip in the stock as a buying opportunity. AutoNation's AN shares declined 7.25% yesterday after the company disclosed in its SEC filing that one of its major shareholders Lampert Edward S (who owned 10% stake in the company) sold close to $10 million worth of shares in the last three trading days of last week. Per the SEC filing, the shares were sold at a price range of $120.31-$123.98 per share.With AutoNation being one of the few promising stocks in the auto space currently, should investors take advantage of this share price fall? We believe so.AutoNation appears an attractive bet on the shining prospects of the Zacks Auto Retail & Whole Sales industry. While the overall auto sector is one of the worst hit by coronavirus-induced microchip shortage compounded by the Russia-Ukraine war, the auto retail industry has defied the downtrend. The industry has moved up 11.1% over the past year compared with the S&P 500 and the sector’s decline of 8.9% and 27.3%, respectively.Image Source: Zacks Investment ResearchAuto Retail Space is Going Great GunsThe auto retail industry currently carries a Zacks Industry Rank #25, which places it in the top 10% of more than 250 Zacks industries. The industry is on a roll thanks to strong vehicle demand and high average prices of both new and used cars amid a supply-demand mismatch. The race to invest vast sums in the e-commerce domain is gathering steam, aiding businesses to reach new heights. Digitization is paying off. Auto retailers are on a buyout spree for scale expansion and commercial synergies. All these factors are helping most of the industry participants to register impressive profits, with near-term prospects remaining bright.AutoNation is a Compelling Buy at the MomentConsidering the industry’s solid prospects and AutoNation’s strong fundamentals, investors should see the latest price dip in the stock as a buying opportunity. Let’s delve deeper into the factors that make AutoNation a lucrative bet.Growth Drivers in Place: The company’s diversified product mix and multiple streams of income reduce the risk profile and augur well for earnings and sales growth. Its strong footprint, a large dealer network and aggressive store expansion efforts along with brand extension strategy and alliances are praiseworthy.Notably, AutoNation posted the eighth consecutive record numbers for first-quarter 2022.The buyouts of 11 stores and one collision center from Peacock Automotive Group have boosted AutoNation’s portfolio and are set to add $380 million in its annual revenues. The buyout of Priority 1 Automotive would add approximately $420 million in annualized revenues. Encouragingly, the firm aims to sell 1 million combined new and pre-owned vehicles on an annual basis by 2026, through organic growth, expansion of AutoNation USA and future buyouts.As of Mar 31, AutoNation had $2.4 billion of liquidity, including $608 million in cash and approximately $1.8 billion under its revolving credit facility. Its times interest earned ratio of 17.02 compares favorably with the industry’s 15.42. Thanks to solid income generation and a strong liquidity profile, the firm is committed to shareholder value maximization, boosting investors’ confidence. Its increased focus on cost discipline is anticipated to aid margins. AutoNation is committed to operating at/below 60% selling, general and administrative (SG&A) as a percentage of gross profit in 2022, signaling a major improvement from its 71%-73% range over the last several years. Its SG&A as a percentage of gross profit was 56.6% in the last reported quarter, representing a 610-basis point improvement year over year.Enhanced digital solutions have helped AutoNation to further boost profitability and market presence. Initiatives like ship-to-home next day, curb-side pick-up option, and buy online, pick-up in stores options are picking pace, driving additional traffic to the company’s website. Omni-channel marketing remains a key component of the company’s long-term strategy and is likely to boost revenues in the future. With the launch of its digital platform AutoNation Express—which enables customers to buy and sell vehicles online, providing them a truly comprehensive and personal experience — the company has stepped up its digitization game.Other Impressive Tidbits: AutoNation currently sports a Zacks Rank #1 (Strong Buy) and has a VGM Score of A. It has outpaced the Zacks Consensus Estimate of earnings in the trailing four quarters, the average surprise being 27.4%. The Zacks Consensus Estimate for AN’s 2022 earnings and sales implies year-over-year growth of 28% and 7%, respectively. Over the past 30 days, the Zacks Consensus Estimate for AutoNation’s 2022 earnings has increased 7 cents a share. The consensus estimate for 2023 has been revised 70 cents upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.2 Other Auto Retailers Ripe for PickingPenske Automotive PAG: Penske is riding high on its strategic acquisitions. It has become the largest dealership group for Freightliner in North America with the Warner Truck Centers buyout. The buyouts of Kansas City Freightliner, McCoy and Team Trucks Centers further boosted Penske’s top line. Over the past 12 months, the company has completed acquisitions or opened new dealerships that would add around $2 billion in annualized revenues.As part of the firm’s used-vehicle expansion, Penske’s U.S. supercenters have been rebranded as CarShop.PAG is on track to step up its CarShop footprint from its current 23 locations to 40 by the end of 2023, thereby retailing at least 150,000 units by 2023 and generating $2.5-$3 billion in total revenues by the same timeframe. The Penske Transportation Solutions (PTS) joint venture has also been enhancing the prospects of Penske Automotive. We also like PAG’s healthy balance sheet and its commitment to maximizing shareholders' value. Penske, which currently carries a Zacks Rank #1, has a VGM Score of A. The Zacks Consensus Estimate for its 2022 sales and earnings indicates a year-over-year uptick of 11% and 14%, respectively. Penske managed to pull off an earnings beat in the last four quarters, with the average being 17.7%. Group 1 Automotive GPI: Group 1's diversified product mix and multiple streams of income reduce its risk profile. The firm’s omnichannel efforts to boost sales bode well. Its digital efforts focused on an online customer scheduling-appointment system are enhancing customer experience. The AcceleRide platform, its online retailing initiative, active at most of the firm’s U.S. dealerships is likely to aid Group 1’s long-term prospects. Group 1’s acquisitions of dealerships and franchises to expand and optimize its portfolio are likely to boost the firm’s prospects. In 2021, the company acquired Prime Automotive in the Northeastern United States and the Robinsons Group in the UK, which have diversified Group 1’s footprint and are set to buoy top-line growth. In 2021, Group 1 completed transactions representing $2.5 billion of acquired revenues.GPI’s investor-friendly moves via dividends and buybacks instill optimism.Group 1, which currently has a Zacks Rank #2 (Buy), has a VGM Score of A. The Zacks Consensus Estimate for its 2022 earnings and sales indicates a year-over-year uptick of 23% and 21%, respectively. Group 1 surpassed earnings estimates in the preceding four quarters, the average surprise being 6.6%.You can see the complete list of today’s Zacks #1 Rank stocks here.  How to Profit from the Hot Electric Vehicle Industry Global electric car sales in 2021 more than doubled their 2020 numbers. And today, the electric vehicle (EV) technology and very nature of the business is changing quickly. The next push for future technologies is happening now and investors who get in early could see exceptional profits. See Zacks' Top Stocks to Profit from the EV Revolution >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Penske Automotive Group, Inc. (PAG): Free Stock Analysis Report AutoNation, Inc. (AN): Free Stock Analysis Report Group 1 Automotive, Inc. (GPI): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJun 14th, 2022

5 Shoes & Retail Apparel Stocks to Eye in a Prospering Industry

The Shoes and Retail Apparel industry looks prim on gains from strong consumer demand, product innovation and digital growth. These aspects bode well for DECK, SKX, SHOO, CAL and RCKY. Companies in the Zacks Shoes and Retail Apparel industry have been benefiting from continued demand for activewear and footwear, given the adoption of a healthy lifestyle. The industry players focused on product innovation, store expansion, digital investments and omni-channel growth are poised to gain in the current market. This has compelled the activewear segment to resort to innovations to make their assortments more comfortable and fashionable. However, elevated costs related to supply-chain headwinds, as well as to support brand campaigns and digital investments have been deterrents.The industry participants have been consistently investing in product innovation based on customer feedback and requirements. Investments in products and e-commerce portals bode well for players like Deckers Outdoor DECK, Skechers U.S.A., Inc. SKX, Steven Madden SHOO, Caleres CAL and Rocky Brands RCKY.About the IndustryThe Zacks Shoes and Retail Apparel industry comprises companies that design, source and market clothing, footwear and accessories for men, women and children under various brand names. The product offerings of the companies mostly include athletic and casual footwear, fashion apparel and activewear, sports equipment, bags, balls, and other sports and fashion accessories. The companies showcase their products through their branded outlets and websites. However, some companies also distribute products via other retail stores such as national chains, online retailers, sporting goods stores, department stores, mass merchandisers, independent retailers and catalogs.A Look at What's Shaping Shoes and Retail Apparel Industry's FutureFitness Trends Aid Industry: Rising health consciousness and the willingness to live an active lifestyle and look fit have led consumers to incorporate sports and fitness routines into their daily lives. The demand for activewear/athleisure products has increased significantly over time, which is expected to accelerate in 2022. Athletic goods and apparel companies now offer everything from sweatshirts, leggings, pants, jackets and tops to yoga wear and running clothes for both men and women. People are clubbing athleisure styles like tops with blazers to give them a formal look at office meetings. The participants remain focused on product innovations, store expansion and enhancing e-commerce capabilities to gain market share. The companies continue to innovate styles, materials and colors and incorporate functional designs to grab a large share of the fast-growing market. The increased participation of women in sports and outdoor activities in recent years has been a boon for the industry.E-Commerce Investments: E-commerce has been playing a crucial role in the athleisure market’s growth. The companies in the segment are looking to build a customer base through websites, social media and other digital channels. As consumers continue to show interest in shopping from home, growth of athletic-inspired apparel and digital sales are likely to stay. Companies focused on expanding their athletic-based apparel lines and building on e-commerce capabilities are expected to witness growth in 2022. Efforts to accelerate deliveries through investments in supply chain and order fulfillment avenues are likely to provide an edge in the market. Simultaneously, companies are investing in renovations and improved checkouts as well as mobile point-of-sale capabilities to make stores attractive. The efforts to enhance the guest experience through multiple channels are likely to contribute significantly to improving traffic and transactions both in stores and online.Cost Headwinds: Companies are witnessing elevated costs due to factors like commodity cost inflation, increase in freight costs and reinvestments and other impacts. A number of companies project increased freight and logistics costs to hurt margins in the near term. Elevated marketing expenses, higher operating overhead and demand-creating expenses, and increased investments toward enhancing store and digital operations have been pushing up SG&A costs. Also, the companies are witnessing higher costs to support brand campaigns and digital investments. The return of sporting activities and events has resulted in higher costs compared with the last year’s COVID-related closure. Additionally, a tough and competitive labor market remains a concern. These factors pose a threat to industry players’ margins.Zacks Industry Rank Indicates Bright ProspectsThe Zacks Shoes and Retail Apparel Industry is a 12-stock group within the broader Zacks Consumer Discretionary sector. The industry currently carries a Zacks Industry Rank #96, which places it in the top 38% of more than 250 Zacks industries.The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates continued outperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gaining confidence in this group’s earnings growth potential.Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and the valuation picture.Industry Vs. the SectorThe Zacks Shoes and Retail Apparel industry has outperformed its sector but underperformed the S&P 500 in the past year.While stocks in the industry have collectively declined 13.7%, the Zacks S&P 500 composite has dropped 12%. Meanwhile, the Zacks Consumer Discretionary sector has declined 39.4%.One-Year Price PerformanceShoes and Retail Apparel Industry's ValuationOn the basis of forward 12-month price-to-earnings (P/E), which is commonly used for valuing Consumer Discretionary stocks, the industry is currently trading at 22.07X compared with the S&P 500’s 16.65X and the sector’s 17.52X.Over the last five years, the industry has traded as high as 36.79X and as low as 19.59X, with the median being at 25.81X, as the chart below shows.Price-to-Earnings Ratio (Past 5 Years)5 Shoes & Retail Apparel Stocks to WatchCaleres: Caleres is a leading footwear retailer and wholesaler in the United States, China, Canada, China, and Guam. It operates through Famous Footwear and Brand Portfolio segments. The stock of this Saint Louis, MO-based company has been benefiting from positive consumer demand trends and accelerated recovery in the footwear marketplace, which have been aiding its sales. The momentum in the Famous Footwear brand is expected to contribute meaningfully to sales growth. Strong performances of CAL’s emerging brands, including Vionic, Sam Edelman, Allen Edmonds and Blowfish Malibu, are expected to be drivers.Management anticipates strong performance at the Famous Footwear brand and gains in Brand Portfolio, leveraging of diversified brand model and the continued execution of ongoing strategic priorities to aid CAL’s performance. Caleres's focus on the consumer's evolving preferences and efforts to drive growth across its omni-channel ecosystem bode well. The consensus estimate for CAL’s fiscal 2022 EPS has moved up 11.3% in the past 30 days. The company has a trailing four-quarter earnings surprise of 62.9%, on average. Shares of this Zacks Rank #1 (Strong Buy) company rose 0.1% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here. .Price and Consensus: CALRocky Brands: Rocky Brands is a leading footwear and accessories company that designs, manufactures and markets premium quality footwear and apparel under a portfolio of well-recognized brand names. The company’s notable brands portfolio includes Rocky, Georgia Boot, Durango, Lehigh, The Original Muck Boot Company, XTRATUF, Servus, NEOS and Ranger. RCKY is benefiting from the flexibility and ability to innovate quickly, given its small size of business.Rocky Brands has been witnessing robust demand for its portfolio of leading brands, which has been aiding performance. The company is making strong progress in regaining the full efficiency of its Ohio distribution center, which along with the new distribution center in Reno, NV, is likely to have improved shipping capacity. The Zacks Consensus Estimate for its 2022 earnings has been unchanged in the past 30 days. It has a trailing four-quarter negative earnings surprise of 2.3%, on average. This Zacks Rank #1 stock has declined 32.6% in the past year.Price and Consensus: RCKYSteven Madden: Steven Madden designs, sources, markets and sells fashion-forward name brand and private label footwear for women, men, and children and private label fashion handbags and accessories globally. SHOO has been gaining from a robust e-commerce momentum, product assortments and accelerated business recovery. The company’s focus on creating trend-right merchandise assortment, deepening relations with customers via marketing, enhancing the digital commerce agenda, expanding international markets and efficiently controlling expenses bodes well. This has been boosting consumer demand, thereby contributing to the overall performance for a while now.Strength in SHOO’s digital and brick-and-mortar channels bodes well. Management is on track to expand the international business. The company’s e-commerce wing continues to gain from prudent investments in digital marketing as well as efforts to optimize the features and functionality of its website. Steven Madden has also been significantly accelerating its digital commerce initiatives with respect to distribution. SHOO has a trailing four-quarter earnings surprise of 44%, on average. The consensus estimate for the company’s 2022 EPS has moved down by a penny in the past seven days. Shares of the Zacks Rank #2 (Buy) footwear company have declined 18.2% in the past year.Price and Consensus: SHOOSkechers: Skechers is a leading manufacturer and seller of footwear for men, women and children in the United States and overseas. SKX has been gaining from the continued demand for comfort products and momentum in the direct-to-consumer business. Skechers remains focused on developing comfort footwear, expanding apparel offerings, advancing e-commerce capabilities and tapping opportunities to drive overall sales. Growth across the domestic and international channels, driven by wholesale and direct-to-consumer sales, bodes well. The company remains committed to directing resources to enhance its digital capabilities, which include augmenting website features, mobile applications and loyalty programs. Investments made to integrate store and digital ecosystems for developing a seamless omnichannel experience are likely to drive greater sales.Skechers’ investments in long-term growth strategies, including brands and infrastructural capabilities, have been yielding results. Management is optimistic regarding the strength of its brands and the relevance of its products in the forthcoming periods. Shares of the Manhattan Beach, CA-based company have declined 19.5% in the past year. The company has a trailing four-quarter earnings surprise of 23.6%, on average. The consensus estimate for SKX’s 2022 EPS has been unchanged in the past 30 days. It currently carries a Zacks Rank #3 (Hold).Price and Consensus: SKXDeckers: This Goleta, CA-based company is a leading designer, producer, and brand manager of innovative, niche footwear and accessories developed for outdoor sports, and other lifestyle-related activities. The company sells products primarily under five proprietary brands — UGG, HOKA, Teva, Sanuk, and Koolaburra. Strength in HOKA ONE ONE and UGG brands as well as growth in direct-to-consumer and wholesale channels has been aiding DECK’s performance. Deckers is targeting profitable and underpenetrated markets, and remains focused on product innovations, store expansion and enhancing e-commerce capabilities. The company’s focus on expanding its brand assortments, bringing a more innovative line of products, targeting consumers digitally and optimizing omni-channel distribution bode well.In keeping with the changing trends, Deckers has been constantly developing its e-commerce portal to capture incremental sales. DECK has made substantial investments to strengthen its online presence and improve shopping experience for its customers. The company’s focus on opening smaller concept omni-channel outlets and expanding programs such as Retail Inventory Online; Infinite UGG; Buy Online, Return In Store; and Click and Collect to enhance customers’ shopping experience is likely to boost the top line in the quarters ahead. DECK has a trailing four-quarter earnings surprise of 1,115%, on average. Shares of the Zacks Rank #3 company have declined 19.3% in the past year. The consensus estimate for its fiscal 2023 EPS has moved up 3.4% in the past 30 days.Price and Consensus: DECK 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +25.4% per year. So be sure to give these hand-picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Deckers Outdoor Corporation (DECK): Free Stock Analysis Report Skechers U.S.A., Inc. (SKX): Free Stock Analysis Report Steven Madden, Ltd. (SHOO): Free Stock Analysis Report Rocky Brands, Inc. (RCKY): Free Stock Analysis Report Caleres, Inc. (CAL): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJun 13th, 2022

Virco Reports 13% Increase in First Quarter Revenue; Competitive Advantages of Domestic Factories and U.S. School Furniture Market Lead to Record Orders and Backlog

Highlights: Shipments + Backlog at May 31, 2022 Reaches $144.4 Million, 20% Higher Than Previous Record of $120.2 Million Established Prior to China's Entry to The World Trade Organization (WTO) U.S. Factory Output Up 45% From Prior Year to Meet Surge in Demand Recent Adjustments to Public Contracts Expected to Offset Inflation TORRANCE, Calif., June 10, 2022 (GLOBE NEWSWIRE) -- Virco Mfg. Corporation (NASDAQ:VIRC), the largest manufacturer and supplier of movable furniture and equipment for educational environments in the United States, today reported financial results for the period ended April 30, 2022 (first quarter of fiscal 2023). Net sales were $32.1 million for the first quarter of fiscal 2023, a 13% increase from $28.4 million for the same period of the prior fiscal year. Net loss was ($5.1 million), or ($0.32) per diluted share for the first quarter of fiscal 2023, an increase of 30% from ($3.9 million), or ($0.25) per diluted share, for the same period of the prior fiscal year. The increased loss in the first quarter was driven by orders that shipped in the first quarter after original booking and pricing before the current inflationary period. These inflation-impacted orders have now largely been cleared from the Company's backlog. In addition, the Company recently negotiated modifications to its public procurement contracts allowing for more frequent price adjustments to offset inflationary impacts in the future. Management believes this modification will have positive material impacts on the Company's operating margins going forward. The market for educational furniture and equipment remains strong. As of May 31, 2022, the fiscal year-to-date shipments plus unshipped backlog ("Shipments + Backlog"), the Company's preferred measure of current and future business activity, reached $144.4 million, a 35% increase from $107.3 million on the same date in the prior year. More significantly, Shipments + Backlog were 20% higher than the company's prior record level achieved in May 2000 (fiscal year-end 2001), one year before China's entry into the World Trade Organization. Robert Virtue, Chairman and CEO of Virco, said, "We continue to see very strong order flow driven by increased funding for schools and many customers returning to Virco after years of using foreign suppliers who can no longer reliably provide quality furniture and equipment at a competitive price. The strong order flow resulted in an increase in revenue over the prior year and significant growth in Shipments + Backlog, which continues to be at a record level. Many of the orders shipped during our fiscal first quarter were booked prior to the price increases that were implemented at the beginning of the year, and the inflationary pressures that increased during the first quarter exacerbated the impact on our profitability. Almost all of our current backlog reflects orders booked following our price increase, and we have recently renegotiated our major public procurement contracts to allow for bi-annual price adjustments. The new pricing and ability to implement more frequent price adjustments should enable us to better manage the impact of inflationary pressures on our operating margins and deliver improved profitability in the future." Doug Virtue, President of Virco, added, "After twenty years of competitive headwinds, we now have the wind at our back. And as more schools invest in the future of American students, who are literally the future of the country, we believe we are ideally positioned to support those investments and provide a long overdue reward to our patient shareholders." "We are effectively increasing capacity utilization within our 2.3 million square feet of integrated manufacturing and distribution facilities with factory output increasing by 45% over the first quarter of last fiscal year. The long-term trends that are driving our strong order flow remain intact and should lead to continued growth in revenue as more schools utilize their increased funding to upgrade or replace older furniture and we take additional market share by providing our customers with innovative, high-quality products that are delivered in a shorter timeframe than what can be offered by our competitors. With higher revenue, the positive impact of our new pricing, and increased capacity utilization, we believe that we are well positioned to deliver improved financial performance and create greater value for our shareholders in the future." FIRST QUARTER FISCAL 2023 FINANCIAL RESULTS Net sales were $32.1 million for the first quarter of fiscal 2023, a 13% increase from $28.4 million for the same period of the prior fiscal year. Gross margin was 30.3% for the first quarter of fiscal 2023, compared with 27.1% in the same quarter of the prior fiscal year. The improvement in gross margin was primarily attributable to better overhead absorption in the Company's U.S. factories, which increased unit output 45% compared to the same period in the prior year. Selling, general and administrative expenses for the three months ended April 30, 2022 increased by approximately $2,468,000 compared to the same period last year. The increase in selling, general and administrative expenses was attributable in part to increased variable freight and service expense and by increased selling expenses. In addition, the Company incurred increased legal expenses in the first quarter of 2022 to enforce its intellectual property rights against a competitor in the school furniture market and for outside legal counsel to advise a special committee of the Board of Directors formed in May 2021 and terminated in May 2022. The special committee was formed to review and advise the Board on an unsolicited acquisition proposal with the assistance of independent legal counsel and an independent financial advisor, which proposal was ultimately rejected as inadequate and not in the best interests of shareholders. Interest expense was $427,000 for the first quarter of fiscal 2023, compared with $293,000 in the same period of the prior fiscal year. The higher interest expense was related to the financing of higher inventory levels to support higher order rates and record backlog. Income tax benefit was $282,000 for the first quarter of fiscal 2023 compared with $1,185,000 for the same period of the prior year, reflecting the effect of the Company recording a valuation allowance against deferred tax assets in the fourth quarter of the fiscal year ended January 31, 2022. About Virco Mfg. Corporation Founded in 1950, Virco Mfg. Corporation is the largest manufacturer and supplier of moveable educational furniture and equipment for the preschool through 12th grade market in the United States. The Company manufactures a wide assortment of products, including mobile tables, mobile storage equipment, desks, computer furniture, chairs, activity tables, folding chairs and folding tables. Along with serving customers in the education market - which in addition to preschool through 12th grade public and private schools includes: junior and community colleges; four-year colleges and universities; trade, technical and vocational schools - Virco is a furniture and equipment supplier for convention centers and arenas; the hospitality industry with respect to banquet and meeting facilities; government facilities at the federal, state, county and municipal levels; and places of worship. The Company also sells to wholesalers, distributors, traditional retailers and catalog retailers that serve these same markets. With operations entirely based in the United States, Virco designs, manufactures, and ships its furniture and equipment from one facility in Torrance, CA and three facilities in Conway, AR. More information on the Company can be found at www.virco.com. Contact:Virco Mfg. Corporation (310) 533-0474Robert A. Virtue, Chairman and Chief Executive OfficerDoug Virtue, PresidentRobert Dose, Chief Financial Officer Non-GAAP Financial Information This press release includes a statement of shipments plus unshipped backlog as of May 31, 2022 compared to the same date in the prior fiscal years. Shipments represent the dollar amount of net sales actually shipped during the period presented. Unshipped backlog represents the dollar amount of net sales that we expect to recognize in the future from sales orders that have been received from customers in the ordinary course of business. The Company considers shipments plus unshipped backlog a relevant and preferred supplemental measure for production and delivery planning. However, such measure has inherent limitations, is not required to be uniformly applied or audited and other companies may use methodologies to calculate similar measures that are not comparable. Readers should be aware of these limitations and should be cautious as to their use of such measure. Statement Concerning Forward-Looking Information This news release contains "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding: market share, net sales and profitability in future periods; the impact of the COVID-19 pandemic on our business, customers, competitors, supply chain and workforce; the anticipated recovery of our customers from COVID-19 and re-opening of school districts; business strategies; market demand and product development; estimates of unshipped backlog; order rates and trends in seasonality; product relevance; economic conditions and patterns; the educational furniture industry including the domestic market for classroom furniture; state and municipal bond and/or tax funding; the rate of completion of bond funded construction projects; cost control initiatives; absorption rates; the relative competitiveness of domestic vs. international supply chains; trends in shipping costs; use of temporary workers; marketing initiatives; and international or non K-12 markets. Forward-looking statements are based on current expectations and beliefs about future events or circumstances, and you should not place undue reliance on these statements. Such statements involve known and unknown risks, uncertainties, assumptions and other factors, many of which are out of our control and difficult to forecast. These factors may cause actual results to differ materially from those that are anticipated. Such factors include, but are not limited to: uncertainties surrounding the severity, duration and effects of the COVID-19 pandemic; changes in general economic conditions including raw material, energy and freight costs; state and municipal bond funding; state, local, and municipal tax receipts; order rates; the seasonality of our markets; the markets for school and office furniture generally, the specific markets and customers with which we conduct our principal business; the impact of cost-saving initiatives on our business; the competitive landscape, including responses of our competitors and customers to changes in our prices; demographics; and the terms and conditions of available funding sources. See our Annual Report on Form 10-K for the year ended January 31, 2022, our Quarterly Reports on Form 10-Q, and other reports and material that we file with the Securities and Exchange Commission for a further description of these and other risks and uncertainties applicable to our business. We assume no, and hereby disclaim any, obligation to update any of our forward-looking statements. We nonetheless reserve the right to make such updates from time to time by press release, periodic reports, or other methods of public disclosure without the need for specific reference to this press release. No such update shall be deemed to indicate that other statements which are not addressed by such an update remain correct or create an obligation to provide any other updates. Financial Tables Follow Virco Mfg. Corporation Unaudited Consolidated Balance Sheets   4/30/2022   1/31/2022   4/30/2021 (In thousands)             Assets           Current assets           Cash $ 539   $ 1,359   $ 556 Trade accounts receivables, net   13,326     17,769     14,334 Other receivables   85     118     39 Income tax receivable   135     152     85 Inventories   66,297     47,373    .....»»

Category: earningsSource: benzingaJun 10th, 2022

United Natural Foods (UNFI) Q3 Earnings & Sales Top Estimates

United Natural Foods' (UNFI) third-quarter fiscal 2022 results reflect higher earnings and sales, with all channels witnessing sales growth. Management updates fiscal 2022 guidance. United Natural Foods, Inc. UNFI reported strong third-quarter fiscal 2022 results, wherein the top and bottom lines improved year over year and came ahead of the respective Zacks Consensus Estimate. Results reflect the company’s focus on catering to customers even amid a tough operating landscape. The company’s Fuel the Future strategy is working well.Quarter in DetailUnited Natural’s adjusted earnings of $1.10 per share increased 10% from the $1.00 delivered in the year-ago period and surpassed the Zacks Consensus Estimate of 98 cents.United Natural Foods, Inc. Price, Consensus and EPS Surprise United Natural Foods, Inc. price-consensus-eps-surprise-chart | United Natural Foods, Inc. QuoteNet sales advanced 9.2% to $7,242 million, beating the Zacks Consensus Estimate of $7,117 million. The upside was mainly backed by inflation and the new business from current and new customers, including gains from cross-selling. This was somewhat countered by a modest market contraction and supply chain-related headwinds.Sales increased across all UNFI’s channels. Chains, Independent retailers, Supernatural and Retail channels witnessed sales growth of 5.2%, 14.6%, 14.1% and 2%, respectively. Other channels sales advanced 7.9%.United Natural’s gross margin (excluding non-cash charge) of 15% improved from the 14.7% reported in the year-ago quarter. The upside was mainly backed by the enhancement in the Wholesale segment’s margin rate, reflecting the effect of inflation and the ValuePath initiative. This was partially hurt by adverse changes in the customer mix.The operating expense rate expanded to 13.4% from the 13.1% reported in the year-ago quarter due to continued investments in servicing customers. This led to elevated transportation and distribution center labor costs and occupancy-related inflation, partly compensated by fixed-cost leverage and gains from United Natural’s ValuePath initiative.Adjusted EBITDA came in at $196 million, up from the $185 million reported in the year-ago quarter. This was a result of the gross margin and operating expenses.Image Source: Zacks Investment ResearchOther UpdatesUnited Natural ended the quarter with cash and cash equivalents of $48 million, long-term debt (including operating and finance lease liabilities) of $3,488 million and total shareholders’ equity of $1,784 million. Net cash used in operating activities amounted to $31 million for the 39 weeks ended Apr 30, 2022.The company’s net debt to adjusted EBITDA leverage ratio was 2.9 as of the end of the third quarter. Following the third quarter, UNFI entered into a new secured asset-based revolving credit facility worth $2.6 billion, which will mature in 2027. This replaced the company’s earlier credit facility of $2.1 billion, which was slated to mature in 2023.Fiscal 2022 GuidanceUnited Natural updated its fiscal 2022 guidance, including the revised definitions of adjusted earnings per share (EPS) and adjusted EBITDA, excluding the impact of the non-cash LIFO charge or benefit. The revised view also reflects higher expectations of the operating performance.For fiscal 2022, management anticipates net sales in the band of $28.8-$29.1 billion. At the midpoint, the metric suggests a 7% rise from the fiscal 2021 reported levels.The company expects adjusted EBITDA in the range of $810-$830 million, indicating a 6% rise at the midpoint of the guidance. The company anticipates fiscal 2022 adjusted earnings in the band of $4.65-$4.90 per share. At the midpoint, the metric indicates a 14% rise from the fiscal 2021 reported levels.The company expects capital expenditures of $250 million for fiscal 2022.This Zacks Rank #3 (Hold) stock has rallied 16.1% in the past three months compared with the industry’s growth of 1.6%.3 Solid Staple StocksSome better-ranked stocks are Pilgrim’s Pride PPC, Sysco Corporation SYY and Medifast MED.Pilgrim’s Pride, which produces, processes, markets and distributes fresh, frozen and value-added chicken and pork products, sports a Zacks Rank #1 (Strong Buy). Pilgrim’s Pride has a trailing four-quarter earnings surprise of 31.4%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for PPC’s current financial-year EPS suggests growth of almost 43% from the year-ago reported number.Medifast, which manufactures and distributes weight loss, weight management, healthy living products and other consumable health and nutritional products, currently sports a Zacks Rank #1. Medifast has a trailing four-quarter earnings surprise of 12.9%, on average.The Zacks Consensus Estimate for MED’s current financial-year sales and EPS suggests growth of almost 19% and 13.4%, respectively, from the year-ago reported figure.Sysco, which engages in marketing and distributing various food and related products, carries a Zacks Rank #2 (Buy). Sysco has a trailing four-quarter earnings surprise of 9.1%, on average.The Zacks Consensus Estimate for SYY’s current financial-year sales and EPS suggests growth of 32.6% and 124.3%, respectively, from the year-ago reported number. Zacks' Top Picks to Cash in on Electric Vehicles Big money has already been made in the Electric Vehicle (EV) industry. But, the EV revolution has not hit full throttle yet. There is a lot of money to be made as the next push for future technologies ramps up. Zacks’ Special Report reveals 5 picks investorsSee 5 EV Stocks With Extreme Upside Potential >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sysco Corporation (SYY): Free Stock Analysis Report Pilgrim's Pride Corporation (PPC): Free Stock Analysis Report United Natural Foods, Inc. (UNFI): Free Stock Analysis Report MEDIFAST INC (MED): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksJun 8th, 2022

Target"s profit warnings over the last month paint a grim picture for retail stocks — and there"s likely more pain ahead even after the sector has dropped 25% in 2022

Target is part of the consumer discretionary sector - the S&P 500's worst-performing this year and analysts have been cutting earnings estimates. John Leyba/The Denver Post via Getty Images Target shares fell Tuesday after the retailer reduced its Q2 profit margin outlook.  The consumer discretionary sector may see more cuts to earnings-growth estimates.  Investors are watching for signs of recession and shifting consumer demands.   Target's margin warning Tuesday sparked a decline in other retail stocks, and there could be more pressure to come on the consumer discretionary sector, which was already the worst-performing group this year on the S&P 500 index.Target shares fell as much as 8% after the big-box retailer reduced its second-quarter profit margin outlook for the second time since mid-May. It said Tuesday it's planning sales to get rid of unwanted inventory and said customers are spending less on discretionary items such as home furnishings and decor while continuing to spend on essentials such as food and beauty items. Target now projects its second-quarter operating margin rate will be around 2%. It previously expected an operating income margin rate in a wide range centered around 5.3%. Target shares plunged in May after the company's first-quarter earnings missed expectations.Investors pulled down shares of rival retailers in the consumer discretionary group on Tuesday. Amazon and Best Buy each lost 2.3%, and TJX gave up 1.9%. Home Depot was off 2%.  On the consumer staples side, Walmart fell 2% and Costco moved down 1.6.%. The S&P 500 Consumer Discretionary Sector on Tuesday fell 1% and has slumped 25% so far in 2022, marking the largest decline among the S&P 500's 11 sectors. The communication services and information tech groups weren't far behind, with slumps of 24% and 20%, respectively. "Tech, consumer discretionary and communication services are the primary groups that are being beaten up by higher interest rates and expectations for lower consumer spending," Sam Stovall, chief investment strategist at research firm CFRA, told Insider in a recent interview. US retail sales have been slowing down since a mid-2020 boom, when sales snapped back from COVID lockdowns. "If I look to earnings, one of the new headwinds that investors will have to contend with is downward revisions to forward earnings estimates," Stovall said. The consumer discretionary sector as of last week had a 16% cut in second-quarter earnings growth estimates. The consumer discretionary sector on March 31 had been expected to earn $12.74 a share, but it's now $10.73, marking the deepest revision of any of the 11 sectors, said Stovall. Overall, "if earnings estimates are coming down as the fear of recession rises, I think we have to anticipate that there could be additional downward earnings revisions," he said. "That's the tug of war that is going on right now. Is that already factored into share prices or is there more to go if we do likely fall into recession? I think there's more to go." Separately on Tuesday, CFRA retained its hold opinion on Target shares and cut its 12-month price view on the stock to $160 from $165. Analyst Arun Sundaram said Target is likely struggling more than other big-box retailers such as Walmart and Costco given its sales mix is more discretionary in nature, with food and beverage making up 20% of its annual sales compared with at least 50% at Walmart and Costco. For Target, that is "compounded by its lack of fuel stations (a disadvantage when consumers are consolidating shopping trips) and relatively smaller stores, which makes it difficult to store excess inventory without compromising guest experience," he wrote.Read the original article on Business Insider.....»»

Category: smallbizSource: nytJun 7th, 2022

3 Specialty Retailers With Special Upside

The TJX Companies, Inc. (NYSE:TJX) is down 15% this year DICK’S Sporting Goods, Inc. (NYSE:DKS) is in a slump down 26% year-to-date Tractor Supply Company (NASDAQ:TSCO) is down 19% this year Have we reached a breaking point for retail?  Whether defiant or stubborn, American consumers continued to spend in April despite persistent inflation at a […] The TJX Companies, Inc. (NYSE:TJX) is down 15% this year DICK’S Sporting Goods, Inc. (NYSE:DKS) is in a slump down 26% year-to-date Tractor Supply Company (NASDAQ:TSCO) is down 19% this year Have we reached a breaking point for retail?  Whether defiant or stubborn, American consumers continued to spend in April despite persistent inflation at a 40-year high. U.S. retail sales increased for the fourth straight month in April as people kept paying more for cars, dining out, and electronics, not to mention gasoline. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Series in PDF Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Yet with the month-over-month growth in retail sales slipping to 0.9% in April, consumers may be nearing their limits. Cutbacks on discretionary purchases seem inevitable with the dollar able to stretch less these days. Then again, with the summer travel season ahead, retail sales could continue to climb. The retail sector is a tricky group to invest in given the macroeconomic backdrop and rapidly evolving shopper habits. It’s also a challenging group for investors to get right because there are so many subsets of retail—supermarkets, drug stores, department stores, and more. Then there are the leftovers which get lumped into the specialty retail industry. Apparel, electronics, home improvement, auto parts, and furniture retailers hang out here. It’s been a rough year to be a retail specialist. The Dow Jones U.S. Specialty Retailers Index has plummeted 35% year-to-date amid a slew of disappointing Q1 results and outlooks. Fortunately, the downturn has put these high quality retail stocks on the clearance rack. Is TJX Companies Stock on the Comeback Trail? The TJX Companies, Inc. (NYSE:TJX) is down 15% this year. If the clothing retailer is still in the red come New Year’s Eve, it would be the first year since 2008 that it didn’t finish higher. The reasons for the pullback aren’t uncommon to the apparel industry. The T.J. Maxx, HomeGoods, and Marshalls parent is dealing with higher freight and wage costs that are eating into profits. This has management projecting second-quarter EPS of $0.67 at the midpoint, a 16% year-over-year decline in profitability. The outlook improves from there though, with analysts expecting improved merchandise availability and strong vendor relationships to drive bottom-line growth in the third quarter and beyond. The consensus forecast for next year’s earnings growth is 15%. Even if we enter a recession, TJX Companies is likely to perform well because it has done so during past economic downturns. It has also fended off the Amazon.com threat better than most due to its unique off-price assortment and appeal with back-to-school shoppers. Yes, there’s still time for the stock to extend its 13-year winning streak. Is it a Good Time to Buy Dick’s Sporting Goods Stock? After hitting a double in 2021, DICK’S Sporting Goods, Inc. (NYSE:DKS) is in a slump down 26% year-to-date. Based on May 25th’s high volume bounce, the stock appears to have found a bottom. The catalyst was the retailer’s first-quarter earnings report that couldn’t have come at a more fortunate time with market sentiment finally on the rise. Even though economic uncertainty caused Dick’s to lower its 2022 outlook, the stock, which had plunged 57% since September 2021, staged a 10% rally in 17x its 90-day average volume. Management struck an upbeat tone about the company’s longer-term growth prospects with near-term headwinds like supply chain disruptions expected to subside. Plus, pandemic-driven interest in outdoor activities like hiking, running, and golfing have staying power according to CEO Lauren Hobart. Consumer interest in Dick’s private-label brands is also expected to support growth. At the midpoint of its full-year EPS guidance, Dick’s is trading at just 8x 2022 earnings. Over the last five years the P/E has averaged 12x. Even after a 33% recovery from its low, Dick’s Sporting Goods is well worth a swing of the bat here. Is Tractor Supply Stock Undervalued? Tractor Supply Company (NASDAQ:TSCO) is down 19% this year after plowing forward in each of the previous four years. The supplier of all things farming has been slowed by the usual suspects of increased wage and transportation expenses. This resulted in first-quarter margin contraction that caused a selloff even though the company managed to beat earnings estimates for the ninth straight quarter. With the market starting to recognize this overreaction, the stock gapped higher on Thursday and Friday and has a return to $200 in its sights. The timing looks good to climb aboard this bandwagon because the spring quarter is historically Tractor Supply’s strongest. This is when farmers, ranchers, and landscaping crews go into high gear as do the retailer’s profits. In the quarters ahead, Tractor Supply is also positioned to benefit from the continuation of pandemic-era trends like home improvement projects, gardening, and at-home hobbies. This along with a pick-up in online sales has management anticipating 7% to 9% sales growth this year and EPS of $9.20 to $9.50. This means that Tractor Supply shares are going for 20x this year’s earnings estimate, a multiple that has climbed fast in recent days but remains below the stock’s 22x historic average. The company’s expansion in the pet industry through pet wellness centers also makes it worthy of a higher valuation. Tractor Supply has one of the best balance sheets in retail that has allowed it to raise its dividend for 14 consecutive years. There are several signs pointing to this being a good time to cultivate a long-term position. Should you invest $1,000 in Tractor Supply right now? Before you consider Tractor Supply, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Tractor Supply wasn't on the list. While Tractor Supply currently has a "Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. Article by MarketBeat Updated on Jun 1, 2022, 1:31 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJun 1st, 2022

2 Great Stocks to Buy in June and Hold Forever

Despite all of the fears and unknowns, investors with long-term outlooks should likely consider buying strong stocks at discounts heading into June and holding them for years. Today, we explore two stocks that are key cogs within the broader economy. Stocks climbed Thursday as investors sort through more economic and earnings data, while continuing to weigh the likelihood of a recession. Wall Street appears to be breathing a slight sigh of relief that the Fed doesn’t plan to ramp up its tightening efforts beyond current market expectations.Investors last week once again prevented the S&P 500 from closing a session down 20% or more from its peaks. The benchmark index is now up over 6% from its intraday lows on Friday, May 20 as it continues to find buyers after it found support at those bear market levels. Wall Street might now attempt to put an end to the S&P 500 and the Nasdaq’s seven-week slide that marked their worst losing streaks since 2001.The market remains focused on an onslaught of headwinds that threaten to throw the U.S. and the global economies into a recession. Fresh Commerce Department data out Thursday said U.S. GDP slipped 1.5% in the first quarter, which was slightly worse than previously thought. This came after JPMorgan last week lowered its U.S. GDP forecast for the second half of the year and 2023, while Goldman Sachs trimmed its outlook for China.The big retailers spooked Wall Street that higher prices across the entire economy would either continue to drag down margins or be passed onto consumers and eventually slow spending. Making matters worse are ongoing inventory issues and supply chain bottlenecks that aren’t set to subside anytime soon with zero-covid lockdowns in various parts of China still ongoing. Russian sanctions also continue to drive up oil and energy costs.   In this chaotic environment, the Fed is attempting to engineer a so-called soft landing for the U.S. economy. Trying to raise interest rates to pull down 40-year high inflation without helping push the economy into a recession won’t be easy.Thankfully, stocks have already been significantly recalibrated, with many growth names and former covid high-flyers having lost more than two years’ worth of gains as investors price in rising interest rates—Cathie Wood’s ARK Innovation ETF is the perfect example. And it’s not just growth stocks, with the S&P 500 now trading around its March 2021 levels.The nearby chart shows that the benchmark index is trading 40% below its highs and near its 20-year median at 17.1X forward 12-month earnings. And the S&P 500 is well below where it was before the initial covid selloff and much of 2016, 2017, and 2018.Wall Street is still trying to figure out how much more of a beating the market can take and the eventual market bottom can often only be located in retrospect. Therefore, despite all of the fears and unknowns, investors with long-term outlooks should likely consider buying strong stocks at discounts heading into June and holding them for years. Today, we explore two stocks that are key cogs within the broader economy.Image Source: Zacks Investment ResearchMicron Technology, Inc. MU Micron is a global memory chip powerhouse, with its offerings found everywhere from PCs to smartphones. Historically, the memory side of the semiconductor market has been impacted greatly by pricing, which has tended to make Micron more cyclical than the larger chip space. Micron’s days of trading more like a commodity might not last forever as its portfolio benefits from expansion into other secular growth areas such as data centers, connected vehicles, and artificial intelligence.Micron’s fiscal 2021 sales surged 29% and its adjusted earnings skyrocketed 115%. More importantly, MU provided upbeat guidance when it reported its second quarter FY22 results at the end of March. The strong showing and outlook highlights MU’s expanded reach and improved pricing power across its portfolio.Zacks estimates call for MU’s FY22 revenue to climb 21% to $33.6 billion, with FY23 expected to surge another 18% to over $39 billion. At the bottom end, Micron’s adjusted earnings are projected to soar 57% and 22%, respectively. MU has topped our bottom-line estimates in every quarter but one in the past five years. And its FY22 and FY23 consensus estimates have climbed recently, even as many companies across the economy lower their guidance.Image Source: Zacks Investment ResearchSemiconductors are the backbone of the digital-driven global economy and Micron shares have doubled the Zacks semiconductor market over the last 10 years and outpaced Technology as a whole, up 1,200% vs. 300%. MU is down in 2022 and it currently trades 27% below its records. Plus, Micron’s Zacks consensus prices target represents nearly 50% upside to its current $71 a share price tag.The pullback and its strong earnings outlook, helps Micron trade near its three-year lows at 6.3X forward 12-month earnings. This also marks a 63% discount to the chip sector and 75% value compared to its own highs during the past few years.Micron’s strong balance sheet will also help it continue to invest in growth and return value to shareholders through buybacks and dividends. No wonder 14 of the 16 brokerage recommendations Zacks has for Micron are “Strong Buys.”Mastercard Incorporated MAMastercard is a consumer and business credit card powerhouse that operates an elaborate backend processing network. MA is diversifying beyond traditional credit cards in order to become a global payments and fintech player built for our dynamic digital finance environment. Mastercard’s newer efforts include buy now, pay later offerings, as well as cryptocurrency-focused acquisitions, and other purchases focused on the future. And Mastercard, alongside Visa, is raising the interchange fees that merchants pay for accepting credit cards. Mastercard crushed our first quarter earnings estimate by 27% at the end of April. The strong showing was driven by its cross-border segment for the second period in a row. MA executives said that its travel-focused segment was stronger than it projected and above 2019 levels for the first time since the pandemic began.Mastercard’s 2021 revenue surged 23% to outpace its pre-pandemic totals by $2 billion. Meanwhile, its adjusted FY21 earnings climbed 31%. Despite slowing economic growth, consumer spending remains strong, which is reflected in its outlook. Zacks estimates call for 17% sales expansion both this year and next to see MA pull in $26 billion in 2023. Mastercard’s adjusted EPS are expected to climb 25% this year and another 20% in 2023.Image Source: Zacks Investment Research Mastercard raised its quarterly dividend by 11% and MA’s board authorized an additional $8 billion share repurchase program last fall. Mastercard currently lands a Zacks Rank #3 (Hold) and 15 of the 20 brokerage recommendations Zacks has are “Strong Buys” with two more “Buys,” and only one below a “Hold.”Some investors might be a little nervous about buying a credit card stock with the possibility of a recession on the horizon. But if you have any confidence in the long-term economic growth in the U.S. and beyond, Mastercard is certainly a stock to own, especially as cash falls further out of favor.MA shares have soared 850% in the last 10 years to destroy the S&P 500’s 300% climb and its industry’s 285%. This includes a 200% run in the past five years. On top of that, Mastercard stock has held up rather nicely amid all of the selling, with it nearly flat in the trailing 12 months and down only 2% in 2022.At roughly $350 per share, Mastercard trades 13% below its records and its current Zacks consensus price target represents 23% upside. The recent downturn has readjusted its valuation, with MA trading 35% below its own highs at 30.5X forward 12-month earnings and below its five-year median of 31.9X. In fact, Mastercard’s valuation is not too far above its decade-long median.  Just Released: Zacks Top 10 Stocks for 2022 In addition to the investment ideas discussed above, would you like to know about our 10 top buy-and-hold tickers for the entirety of 2022? Last year's 2021 Zacks Top 10 Stocks portfolio returned gains as high as +147.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buysAccess Zacks Top 10 Stocks for 2022 today >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Mastercard Incorporated (MA): Free Stock Analysis Report Micron Technology, Inc. (MU): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksMay 26th, 2022

Dollar General and Dollar Tree soar after discount chains raise guidance as inflation drives wave of bargain hunters to stores

Dollar Tree says customers are responding well to its increased price point to $1.25. Dollar General said Q1 sales grew despite inflation headwinds. Dollar Tree raised its price point to $1.25 in 2021.Frederic J. Brown/AFP/Getty Images Dollar General and Dollar Tree shares surged Thursday after upbeat financial updates from the discount retailers.  Dollar General raised its 2022 same-store sales view, and Dollar Tree increased its 2022 sales forecast.  Wall Street has been worried about consumers who are facing higher prices for basic goods.  Dollar General and Dollar Tree jumped Thursday after raising their guidance for 2022, bolstered by shoppers heading to the discount retailers with inflation burning at a four-decade high. "Despite ongoing headwinds due to supply chain pressures and heightened inflation, we remained focused on controlling what we can control and delivered solid financial results, which exceeded our expectations for sales and EPS for the quarter," Todd Vasos, Dollar General's CEO, said in the company's first-quarter earnings report. Dollar General stock spiked 12% to $219.42 in early trade. Shares of Dollar Tree surged 17% to $156.41. It said first-quarter sales rose by 6.5% to $6.9 billion and that customers are "responding favorably" to its increased $1.25 price point.The upbeat updates were in contrast to missed earnings expectations by retailer behemoths Target and Walmart last week that raised worries about how well shoppers are faring in the face of higher prices for gas, food and energy. Consumer price inflation in April reached 8.3%, slightly easing from March's 41-year high of 8.5%. Dollar Tree increased its full-year 2022 net sales outlook to a range of $27.76 billion to $28.14 billion from its previous range of $27.22 billion to $27.85 billion.At Dollar General, 2022 same-store sales are now seen rising 3% to 3.5%, up from its previous forecast of 2.5% growth.Stock in each company has lost ground during 2022. Dollar General was off by 17% through Wednesday and Dollar Tree had declined by nearly 5%.Read the original article on Business Insider.....»»

Category: dealsSource: nytMay 26th, 2022

6 Best Inverse/Leveraged ETF Areas of Last Week

Wall Street was downbeat last week, with losses seen in all major indexes. Wall Street was downbeat last week, with losses seen in all major indexes. The S&P 500 recorded its longest weekly losing streak since the dot-com bubble burst, per a Yahoo Finance article. The S&P 500 (down 3.1%), the Dow Jones (down 2.90%), the Nasdaq Composite (down 3.8%) and the Russel 2000 (down 1.1%) all shed gains.Concerns that tighter monetary policies to tame surging inflation will slow down global economic growth have weighed on the risk sentiment and driven investors toward the safe-haven assets like U.S. treasuries. iShares 20+ Year Treasury Bond ETF TLT was up 2.3% past week.Rising greenback weighed on corporate profits. Companies pointing to currency headwinds in their latest earnings reports include Coca-Cola Co, Procter & Gamble and Philip Morris International Inc. Analysts cut their overall forecast for S&P 500 second-quarter profit growth to 5.6% from 6.8% at the start of April owing to the current headwinds, per a Reuters article.As far as benchmark U.S. treasury yields are concerned, the week started with a 2.88% yield, hit a high of 2.98% and ended at 2.78%. This happened because investors sought bonds’ safety amid renewed recessionary concerns. And due to a decline in the long-term bond yields, TLT gained last week.Against this backdrop, below we highlight a few winning inverse/leveraged ETFs of last week.Technology/InternetThe tech-heavy Nasdaq Composite had slipped into a bear market earlier this year, as traders dumped growth stocks due to rising rate concerns, which would weigh on high-flying tech stocks’ valuations. As of Friday’s close, the Nasdaq Composite had slumped about 30% from its record high from Nov 19, 2021.DJ Internet Bear 3X Direxion WEBS – Up 15.4%Ultrapro Short QQQ ETF SQQQ – Up 11.99%Microsectors Fang & Innovation -3X ETN (BERZ) – Up 9.9%Microsectors Fang+ -3X ETN (FNGD) – Up 8.9%Inverse S&P 500The S&P 500 has been hovering around 20% below its recent record high, which would represent the index’s first bear market since the COVID-19 pandemic-induced crash in early 2020.Ultrapro Short S&P500 ETF SPXU – Up 8.6%      S&P 500 Bear 3X Direxion SPXS – Up 8.4%Ultrashort S&P500 ETF (SDS)– Up 5.7%Inverse Dow JonesThe Dow Jones has slipped into a correction (meaning at least 10% from a recent record high).Ultrapro Short Dow 30 Proshares SDOW – Up 8.1%Ultrashort Dow30 ETF DXD – Up 5.5%Inverse Leveraged Consumer Services   Weaker-than-expected earnings results and guidance from some of the major U.S. retailers indicated that companies were having more difficulty passing on rising costs to consumers. Inflation and supply chain disruptions have had on profitability of consumer companies.Ultrashort Consumer Services ETF SCC – Up 12%Leveraged Natural GasNatural gas futures spiked to a more than a decade high level on tight supply conditions, adverse weather conditions and declining inventories. The jump in prices came as the conflict between Russia and Ukraine sparked fears of global supply disruption in an already tight-supply market. Western countries have slapped severe sanctions against Russia over Ukraine, disrupting trade flows. Sanctions by the United States and other countries will force Russia to supply less natural gas, thereby pushing prices higher.Ultra Bloomberg Natural Gas ETF BOIL – Up 11.1%Inverse Leveraged FinancialsAs long-term bond yields slumped, financial stocks lost gains as these fare better in a rising rate environment.Financial Bear 3X Direxion FAZ – Up 3.8%Ultrashort Financials ETF (SKF) – Up 2.5% Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report iShares 20 Year Treasury Bond ETF (TLT): ETF Research Reports ProShares UltraPro Short S&P500 (SPXU): ETF Research Reports Direxion Daily Financial Bear 3x Shares (FAZ): ETF Research Reports Direxion Daily S&P 500 Bear 3X Shares (SPXS): ETF Research Reports ProShares UltraPro Short Dow30 (SDOW): ETF Research Reports ProShares UltraPro Short QQQ (SQQQ): ETF Research Reports ProShares Ultra Bloomberg Natural Gas (BOIL): ETF Research Reports ProShares UltraShort Dow30 (DXD): ETF Research Reports ProShares UltraShort Consumer Services (SCC): ETF Research Reports Direxion Daily Dow Jones Internet Bear 3X Shares (WEBS): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksMay 23rd, 2022

Top Stock Reports for Alphabet, UnitedHealth & Costco

Today's Research Daily features new research reports on 16 major stocks, including Alphabet Inc. (GOOGL), UnitedHealth Group Incorporated (UNH), and Costco Wholesale Corporation (COST). Monday, May 23, 2022The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Alphabet Inc. (GOOGL), UnitedHealth Group Incorporated (UNH), and Costco Wholesale Corporation (COST). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.You can see all of today’s research reports here >>>Shares of Alphabet have lagged the broader market this year (-21% vs. -16%), but have held up better than the Tech sector (-21% vs. -26.7%). The stock's weakness is a reflection of sentiment shift on faster-growing stocks in a rising rate environment. But the company is well positioned in the long run, given its search dominance, lucrative advertising business and a host of next generation investments. The Zacks analyst believes that Alphabet's robust cloud division continues to be the key catalyst. Moreover, expanding data centres will continue to bolster its presence in the cloud space. Further, major updates in its search segment are enhancing the search results. Moreover, Google’s mobile search is constantly gaining solid traction. Also, strong focus on AI techniques and the home automation space should aid business growth. However, growing litigation issues and the Russia-Ukraine war remain concerns. (You can read the full research report on Alphabet here >>>) Shares of UnitedHealth have outperformed the Zacks Medical - HMOs industry over the past year (+18.2% vs. +16.2%) on the back of a strong market position and an attractive core business that continues to be driven by new deals, renewed agreements and expansion of service offerings. UnitedHealth reported strong first-quarter 2022 results thanks to growth in its business segments. A sturdy balance sheet enables investments and prudent capital deployment through share buybacks and dividends. However, softness in commercial business due to the COVID-induced volatilities persists. Also, rising operating costs are hurting its profits. (You can read the full research report on UnitedHealth here >>>) Shares of Costco have outperformed the Zacks Retail - Discount Stores industry over the past year (+8.6% vs. -11.0%). The Zacks analyst believes that being a consumer defensive stock, Costco has been surviving the market turmoil pretty well. The discount retailer's key strengths are strategic investments, a customer-centric approach, merchandise initiatives, and an emphasis on membership growth. These factors have been helping it register impressive sales and earnings numbers. A favorable product mix, steady store traffic, pricing power and strong liquidity position should help Costco keep outperforming. While it is trading at a premium to its peers, the Zacks analyst believes that the company’s long-term growth prospects should help the stock see a solid upside. (You can read the full research report on Costco here >>>) Other noteworthy reports we are featuring today include Cisco Systems, Inc. (CSCO), Wells Fargo & Company (WFC), and Sanofi (SNY). Sheraz Mian Director of Research Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>> Today's Must ReadAlphabet (GOOGL) Benefits From Cloud & Search InitiativesUnitedHealth (UNH) to Ride on UnitedHealthcare & Optum UnitsDecent Comparable Sales Run to Fuel Costco's (COST) Top LineFeatured ReportsCisco (CSCO) Benefits From Strong Security Products AdoptionPer Zacks analyst, Cisco is benefiting from a rapidly growing security market driven by robust adoption of identity and access, advanced threat and unified threat management security solutions.Cost Control Aids Wells Fargo (WFC) Amid Declining RevenuesPer the Zacks analyst, Wells Fargo's cost-saving measures like branch closures and headcount reduction will help offset the falling revenue trends resulting from the mortgage banking income headwinds.Sanofi (SNY) Boasts a Solid & Expanding PipelineThe Zacks analyst believes Sanofi's R&D pipeline is strong. It has launched several new drugs in the past couple of years and is expanding its pipeline through M&A deals.Strategic Acquisitions Aid Schwab (SCHW) Amid Lower RatesPer the Zacks analyst, Schwab's inorganic growth initiatives and other revenue diversification efforts will aid profits. Despite the expected rate hikes, relatively low rates might hurt the top line.America Movil (AMX) Benefits from Increasing Subscriber BasePer the Zacks analyst, America Movil's performance is gaining from growing subscriber base. However, intense competition from U.S. telecom behemoth AT&T and high debt load are major concerns.Strategic Alliances Aid Walgreens (WBA) Amid Stiff RivalryThe Zacks analyst is upbeat about Walgreens' recent collaborations with VillageMD and Vitamin Angels. Yet, increasing competition from traditional drug store retailers continues to pose challenges.FLEETCOR (FLT) Rides on Buyouts Amid Higher Interest ExpenseThe Zacks Analyst likes FLEETCOR's buyout strategy to expand customer base and diversify its service offerings across industries. Higher interest expense is likely to keep the bottom line under pressuNew UpgradesMulti-basin Portfolio, Low Cost Asset Aid Murphy Oil (MUR)Per the Zacks analyst Murphy Oil's maintenance of a multi-basin portfolio boosts production and low cost operating assets in North America will drive operation.PBF Energy (PBF) Continues to Gain From Refining BusinessPer the Zacks analyst, PBF Energy's refining business is likely to benefit from the rising demand for refined petroleum products.Kronos Worldwide (KRO) Gains on Higher TiO2 Demand, PricesPer the Zacks analyst, higher titanium dioxide (TiO2) demand will drive the company's sales volumes. Higher average TiO2 selling prices will also support its margins.nNew DowngradesBoeing 787 Issue, Pandemic's Impact to Hurt Triumph (TGI)Per the Zacks analyst, lower production rate and paused delivery for Boeing's 787 jets may impact Triumph Group's results. Also, supply-chain issue arising from the COVID-19 might hurt the stock.Supply Chain Woes & Higher Costs Dent Gap's (GPS) MarginsPer the Zacks analyst, higher air freight due to supply-chain woes, dented Gap's margins in Q4. Elevated costs for marketing and technology, as well as compensation and fulfilment are also deterrents.Continued Weakness in China Ails V.F. Corp's (VFC) Top LinePer the Zacks analyst, V.F. Corp's China business remains affected by COVID-related lockdowns, travel restrictions and consumer anxiety. It now predicts China business to be down almost 35% in Q1. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Wells Fargo & Company (WFC): Free Stock Analysis Report Sanofi (SNY): Free Stock Analysis Report UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report Cisco Systems, Inc. (CSCO): Free Stock Analysis Report Costco Wholesale Corporation (COST): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksMay 23rd, 2022

The Children"s Place (PLCE) Q1 Earnings Miss, Comps Fall Y/Y

The Children's Place (PLCE) first-quarter fiscal 2022 results reflect a significant decline in net sales due to the lapping of the pandemic relief payments last year. The Children’s Place, Inc. PLCE came up with first-quarter fiscal 2022 results, wherein both the top and the bottom lines not only missed the Zacks Consensus Estimate but also declined year over year. Soaring inflation, unseasonably cold weather and the lapping of the unprecedented stimulus released into the economy in March last year adversely impacted the company’s quarterly performance. Management pointed out that 2022 March sales plunged approximately 35% year over year.This pure-play children’s specialty apparel retailer expects inflation to persist into fiscal 2023 and continue to impact lower-income consumers. Owing to the unprecedented level of inflation and the lack of visibility about its impact in the near term, management trimmed the sales forecast for fiscal 2022. It now envisions a mid-single-digit decline in sales versus its earlier projection of growth of 1%.In spite of these headwinds, The Children’s Place foresees a double-digit operating margin and double-digit earnings per share for fiscal 2022 and beyond, supported by a structural reset to the business model made in the last two years. It also appears enthusiastic about the launch of the Gymboree brand on Amazon’s website in July this year.Let’s AnalyzeThe Children’s Place posted adjusted earnings of $1.05 per share that fell short of the Zacks Consensus Estimate of $1.66. The reported figure declined sharply from the year-ago period figure of $3.25, thanks to lower net sales and margin contraction.Net sales of $362.4 million decreased 16.8% year over year, primarily due to the lapping of the pandemic relief payments last year, the impact of inflation on customers, prolonged unseasonably cold temperature through the end of the quarter in key markets, and the impact of permanent store closures. The top line also came below the Zacks Consensus Estimate of $406 million, marking the fourth straight miss.U.S. net sales fell 21% year over year to $306 million, while Canadian net sales increased 2% to $31 million. Comparable retail sales fell 16.9% from the year-ago period.Consolidated digital sales declined 18% year over year during the quarter. We note that digital sales represented 45% of total retail sales, with approximately 73% of digital business now coming through a mobile device. Again, store net sales were down 20% from the year-ago period, while comp-store traffic fell 8%.The Children's Place, Inc. Price, Consensus and EPS Surprise The Children's Place, Inc. price-consensus-eps-surprise-chart | The Children's Place, Inc. QuoteMargin DiscussionsMoving on, the first-quarter adjusted gross profit was $141.9 million, down from $189.2 million in the year-ago period. Again, gross margin shriveled 429 basis points to 39.2%. This year-over-year contraction was the result of higher inbound transportation costs and the deleverage of fixed expenses resulting from lower net sales. These were partly offset by higher merchandise margins in both channels, driven by AUR increases.Management informed that increased inbound freight transportation costs owing to higher levels of air freight costs and rise in container rates hurt gross margin rate by about 275 basis points.Adjusted SG&A expenses increased 3.9% to $108.2 million in the reported quarter. As a percentage of net sales, the metric deleveraged 595 basis points to 29.9%, primarily due to the deleveraging of fixed expenses resulting from lower net sales as well as planned higher marketing spend.The company’s adjusted operating income came in at $20.6 million, down significantly from $70.7 million in the comparable period last year. Meanwhile, the adjusted operating margin contracted 1,057 basis points to 5.7%.Store UpdateThe Children’s Place ended the quarter with 665 stores. With respect to its store fleet optimization strategy, The Children’s Place permanently shuttered seven stores during the first quarter. The company plans to close roughly 40 stores in fiscal 2022. Since the announcement of the fleet optimization initiative in 2013, the company has permanently closed 534 stores.Other Financial AspectsThe Children’s Place ended the quarter with cash and cash equivalents of $58.5 million. The company had $249.5 million outstanding on its revolving credit facility as of Apr 30, 2022. Stockholders' equity at the end of the quarter was $213.7 million.The company incurred capital expenditures of approximately $11 million during the quarter. Management anticipates fiscal 2022 capital expenditures in the range of $55 million, with a major portion to be allocated to digital and supply chain fulfillment initiatives.During the quarter, the company bought back 666,000 shares for approximately $38.8 million. As of Apr 30, 2022, the company had approximately $218.6 million remaining under its existing share repurchase program.OutlookManagement foresees sales trends to improve compared with the first quarter of fiscal 2022 as the company progresses through the balance of the fiscal year. It envisions back-to-school sales this year to be significantly lower than the last year, which had benefited from pent-up demand and the rollout of enhanced child tax credits.The Children’s Place anticipates lower occupancy costs compared with the last year due to the impact of permanent store closures. Given accelerated digital transformation and structural reset to the business model, the company expects to generate higher operating cash flow for the fiscal year versus pre-pandemic.Shares of this Zacks Rank #3 (Hold) company have lost 26.2% in the past three months compared with the industry’s decline of 28.4%.3 Stocks Hogging the LimelightHere we highlight three top-ranked stocks, namely, Steven Madden SHOO, G-III Apparel GIII and Designer Brands DBI.Steven Madden is a leading designer and marketer of fashion-forward footwear, accessories and apparel for women, men and children. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Steven Madden’s current financial year revenues and EPS suggests growth of 15.2% and 19.6%, respectively, from the year-ago reported figure. SHOO has a trailing four-quarter earnings surprise of 44%, on average.G-III Apparel designs, sources and markets apparel and accessories under owned, licensed and private label brands. The stock currently carries a Zacks Rank #2 (Buy).The Zacks Consensus Estimate for G-III Apparel’s current financial year revenues and EPS suggests growth of 10% and 5.4%, respectively, from the year-ago reported figure. G-III Apparel has a trailing four-quarter earnings surprise of 160.6%, on average.Designer Brands, one of North America's largest designers, producers and retailers of footwear and accessories, carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 112.8%, on average.The Zacks Consensus Estimate for Designer Brands’ current financial year sales and EPS suggests growth of 6.5% and 8.8%, respectively, from the year-ago period. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Children's Place, Inc. (PLCE): Free Stock Analysis Report GIII Apparel Group, LTD. (GIII): Free Stock Analysis Report Steven Madden, Ltd. (SHOO): Free Stock Analysis Report Designer Brands Inc. (DBI): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksMay 20th, 2022

Retail Sales Improve Overall; WMT & HD Move Different Directions

We're seeing consumer spending strength, even faced with strong headwinds for goods, particularly gasoline. Tuesday, May 17, 2022Retail Sales for the month of April are out this morning, and the results are mostly quite positive: +0.9% on the headline figure was a smidge below the +1.0% expected, marking the fourth-straight month higher for retailers (although the margins are dwindling notably month to month). But the revision to March nearly tripled from +0.5% originally reported to +1.4% this morning.Stripping out expensive vehicle sales, this number looks even better: +0.6% versus +0.4% anticipated, down from the upwardly revised +2.1% the previous month. In this metric, the “core” read strips out both auto and gasoline sales, which rose +1% versus expectations of +0.75%. The Control number (which informs other economic calculations elsewhere) reached +1.0%, 30 basis points higher than the +0.7% expected — the second-highest print of the year so far.So we’re seeing consumer spending strength, even faced with strong headwinds for goods, particularly gasoline. This is good news overall, because it reduces the risks associated with inflation as long as the consumer is able to take on higher prices. Pre-market futures have stayed strongly in the green following this Retail Sales report.Meanwhile, we see a tale of two retailers ahead of today’s opening bell: Home Depot HD beat expectations on both top and bottom lines, with earnings of $4.09 per share easily above the $3.86 in the Zacks consensus and the $3.66 per share in the year-ago quarter. But Walmart WMT missed expectations by -11% on its bottom line, with earnings of $1.30 per share versus $1.46 estimate and $1.69 per share in the year-ago quarter.Both retailers beat top-line estimates, and both saw comps rise in the quarter. But issues with inventories and overstaffing sandbagged Walmart’s Q1, sending its shares down -6% ahead of the bell, swinging to a negative stock performance year to date. Home Depot, on the other hand, has gained +4.5% on the news (though is still down big year to date).For more on WMT’s earnings, click here.For more on HD’s earnings, click here.Questions or comments about this article and/or its author? Click here>> Just Released: Zacks Top 10 Stocks for 2022 In addition to the investment ideas discussed above, would you like to know about our 10 top picks for the entirety of 2022? From inception in 2012 through 2021, the Zacks Top 10 Stocks portfolios gained an impressive +1,001.2% versus the S&P 500’s +348.7%. Now our Director of Research has combed through 4,000 companies covered by the Zacks Rank and has handpicked the best 10 tickers to buy and hold. Don’t miss your chance to get in…because the sooner you do, the more upside you stand to grab.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Walmart Inc. (WMT): Free Stock Analysis Report The Home Depot, Inc. (HD): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report.....»»

Category: topSource: zacksMay 17th, 2022

Retail Sales Increased in April

Retail Sales Increased in April Retail Sales for the month of April are out this morning, and the results are mostly quite positive: +0.9% on the headline figure was a smidge below the +1.0% expected, marking the fourth-straight month higher for retailers (although the margins are dwindling notably month to month). But the revision to March nearly tripled from +0.5% originally reported to +1.4% this morning.Stripping out expensive vehicle sales, this number looks even better: +0.6% versus +0.4% anticipated, down from the upwardly revised +2.1% the previous month. In this metric, the “core” read strips out both auto and gasoline sales, which rose +1% versus expectations of +0.75%. The Control number (which informs other economic calculations elsewhere) reached +1.0%, 30 basis points higher than the +0.7% expected — the second-highest print of the year so far.So we’re seeing consumer spending strength, even faced with strong headwinds for goods, particularly gasoline. This is good news overall, because it reduces the risks associated with inflation as long as the consumer is able to take on higher prices. Pre-market futures have stayed strongly in the green following this Retail Sales report.Meanwhile, we see a tale of two retailers ahead of today’s opening bell: Home Depot (HD) beat expectations on both top and bottom lines, with earnings of $4.09 per share easily above the $3.86 in the Zacks consensus and the $3.66 per share in the year-ago quarter. But Walmart (WMT) missed expectations by -11% on its bottom line, with earnings of $1.30 per share versus $1.46 estimate and $1.69 per share in the year-ago quarter.Both retailers beat top-line estimates, and both saw comps rise in the quarter. But issues with inventories and overstaffing sandbagged Walmart’s Q1, sending its shares down -6% ahead of the bell, swinging to a negative stock performance year to date. Home Depot, on the other hand, has gained +4.5% on the news (though is still down big year to date). Just Released: Zacks Top 10 Stocks for 2022 In addition to the investment ideas discussed above, would you like to know about our 10 top picks for the entirety of 2022? From inception in 2012 through 2021, the Zacks Top 10 Stocks portfolios gained an impressive +1,001.2% versus the S&P 500’s +348.7%. Now our Director of Research has combed through 4,000 companies covered by the Zacks Rank and has handpicked the best 10 tickers to buy and hold. Don’t miss your chance to get in…because the sooner you do, the more upside you stand to grab.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Walmart Inc. (WMT): Free Stock Analysis Report The Home Depot, Inc. (HD): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksMay 17th, 2022

Futures Jump Amid Optimism China"s Covid Lockdowns Are Ending

Futures Jump Amid Optimism China's Covid Lockdowns Are Ending Another day, another dead cat-bouncing, bear market rally. After Monday's flattish session which saw tech names slump on fresh inflation fears, Nasdaq futures rebounded on Tuesday, setting up technology stocks for solid gains after a six-week rout as investors were encouraged by China's easing covid lockdowns and amid speculation that Beijing regulators may ease a yearlong clampdown on internet companies at an upcoming meeting with tech executives. Nasdaq 100 futures jumped 2% by 7:00 a.m. in New York after the underlying gauge sank on Monday on concerns about a slowdown in economic growth; S&P 500 futures rose 1.6%. Treasury yields rose modestly above 2.90%, and the dollar retreated. Bitcoin managed to rebound back over $30K. Confirming what we said almost three weeks ago, Shanghai reported three days of zero community transmission, a milestone that could lead officials to start unwinding a punishing lockdown. However, flareups elsewhere in China showed how hard it is to tackle the omicron strain. Among notable moves in US premarket trading, Twitter shares fell 3.3%, set to extend declines for an eighth straight session amid uncertainties around the deal with Elon Musk, while Citigroup rose 4.9% after Warren Buffett’s Berkshire Hathaway unexpectedly disclosed a new stake in the lender, a return to banks for the billionaire who purged many of his bank holdings several years ago. Tech names including Advanced Micro Devices, Tesla and Nvidia were among the biggest premarket gainers as growing recession concerns prompt markets to reasses just how many rate hikes the Fed will pull off before it is forced to reverse. Cryptocurrency-exposed stocks climbed as Bitcoin rose above $30,000 on Tuesday in cautious trading, with the fallout from a collapsed stablecoin continuing to keep sentiment in check. Chinese stocks in US jumped across the board in premarket trading on speculation that regulators may ease a yearlong clampdown on internet companies at an upcoming meeting with tech executives. Here are the most notable premarket movers: Twitter (TWTR US) shares fell 2.4% in premarket trading, on course to extend their seven-day streak of declines, as uncertainties around a deal by buyer Elon Musk weigh on the stock. Tesla (TSLA US) shares rallied 3% in premarket trading. Chinese stocks in US jump across the board in premarket trading on speculation that regulators may ease a yearlong clampdown on internet companies at an upcoming meeting with tech executives. Alibaba (BABA US) +6.2%, JD.com (JD US) +5.6%, Pinduoduo (PDD US) +7% and Baidu (BIDU US) +3.6% Cryptocurrency-exposed stocks climb in US premarket as Bitcoin rises above $30,000 on Tuesday in cautious trading, with the fallout from a collapsed stablecoin continuing to keep sentiment in check. Riot Blockchain (RIOT US) +7.8%; Coinbase (COIN US) +6.8%; Marathon Digital (MARA US) +6.1% Advanced Micro Devices (AMD US) upgraded to overweight from neutral at Piper Sandler, which says in note that the company’s core businesses are running well and mid-to-long-term catalysts remain intact. Stock gains 3.6% in New York premarket trading. United Airlines Holdings’ (UAL US) updated second-quarter guidance is “a solid step in the right direction,” Citi says. United’s shares gained 4.3% in premarket trading. Bird Global (BRDS US) shares jump as much as 40% in US premarket trading with DA Davidson noting management’s announcement of a plan to streamline operations. Take-Two (TTWO US) reported better-than-expected fourth-quarter earnings helped by popular video games like NBA 2K22. The company’s shares rise 5.4% in premarket trading. Global-e Online (GLBE US) shares slump as much as 30% in US premarket trading as analysts slash their price targets on the e-commerce software firm after it lowered its full-year guidance for revenue and gross merchandise value. Imperial Petroleum (IMPP US) shares plunge 48% in US premarket trading. The shipping company priced an underwritten public offering of 72.7m units at $0.55 per unit, with expected gross proceeds of ~$40m. US stocks have been roiled in the past six weeks as the combination of high inflation and hawkish central banks fueled fears of a potential recession. While some strategists including Morgan Stanley’s Michael Wilson expect equities to fall further before finding a floor, they don’t foresee a recession as their base case. The main focus today will be on US retail sales data, which are expected to show a rise of 1% in April. “Investors’ appetite for riskier assets is on the rise after many welcomed today’s positive unemployment and GDP figures” from the eurozone and UK, said Pierre Veyret, an analyst at ActivTrades Plc. “The improving virus situation in China is also blowing a wind of relief in investors’ trading minds.” A challenging global economic outlook amid elevated food and record fuel costs, and tightening monetary settings continues to shape sentiment.  Oil has jumped to about $114 a barrel and an index of agricultural prices is at a record high. But one bond-market measure - the five-year breakeven rate - is signaling inflation has peaked, while the latest virus developments raised hopes China’s damaging lockdowns may soon be eased. On Monday, New York Fed President John Williams on Monday downplayed deteriorating liquidity conditions in financial markets, saying it was to be expected as investors grapple with uncertainty over global events and shifting U.S. monetary policy. No less than six Fed speakers - including Chair Jerome Powell - are due to speak later Tuesday. In Europe, technology and basic-resources stocks led a broad-based advance of the Stoxx Europe 600 following a rally in Chinese tech shares on optimism Beijing may ease up on a yearlong clampdown. Italy's FTSE MIB adds 1.6%, FTSE 100 lags, adding 0.7%. Miners, financial services and banks are the strongest-performing sectors. Equities were also buoyed by data showing the euro-area economy expanded more than initially estimated at the start of the year as the region moved past a wave of Covid-19 infections and defied headwinds from the early days of the war in Ukraine. Here are the biggest European movers: Clariant shares rise as much as 8.7% after the specialty chemical company announced its governance agreement with SABIC will expire at the June 24 AGM, and won’t be renewed. Imperial Brands climbs as much as 7.9% after the tobacco company reduced its losses from next-generation products and continued on a turnaround plan. Daimler Truck gains as much as 7.8% in Frankfurt; Oddo BHF notes strong 1Q report that will reassure in the current environment, while Citi says the company delivered an “encouraging” set of results. Engie rises as much as 6.9%, hitting the highest since March 1, after the French energy company boosted its profit guidance on higher European energy prices. CaixaBank advances as much as 5.4% after the Spanish lender released a new strategic plan that predicts a jump in a key profitability metric and announced a EU1.8b share buyback program. Prosus and Naspers both raised to overweight from neutral at JPMorgan following the broker’s upgrade of Tencent. Prosus shares gain as much as 6.5% in Amsterdam, Naspers climbs as much as 6.7% in Johannesburg. ContourGlobal gains as much as 34% after US private equity firm KKR agreed to buy the power generation business for 263.6p/share in cash, representing a premium of 36% to Monday’s close. Vodafone erases losses after dropping as much as 4.2% as the telecom operator’s forecast for adjusted Ebitda after-leases missed consensus estimates at mid- point. Earlier in the session, Asian stocks advanced for a third day -- its longest winning streak since mid-March -- amid a jump in some technology firms on the back of hopes for an unwind of Chinese lockdowns that have hurt the global economic outlook as well as a dialing back of Beijing’s regulatory crackdowns. The MSCI Asia-Pacific Index climbed as much as 1.5%, on track for a third day of gains. Chinese tech giants Tencent and Alibaba contributed most to the gain, while chipmakers TSMC and Samsung also helped. Shanghai reported no new Covid infections in the broader community for a third day, hitting a crucial milestone toward reduced restrictions. China’s top political advisory body is hosting a meeting Tuesday with some of the nation’s largest private-sector firms, sparking hopes for an improved business climate.  “The mood in Asia is risk on,” said Xue Hua Cui, a China equity analyst at Meritz Securities in Seoul. “Whether this remains a dead cat bounce or not depends on how quickly demand recovers following the end of Shanghai lockdowns.” Hong Kong outperformed, with the Hang Seng Index rising more than 3%. Benchmarks in India also advanced more than 2%, even as state-run insurer Life Insurance Corporation of India dropped in its Mumbai trading debut after a record initial public offering for the nation.  Japanese equities gained with Asian peers amid hopes that China will ease up on Covid lockdowns and regulatory crackdowns. The Topix rose 0.2% to close at 1,866.71. Tokyo time, while the Nikkei advanced 0.4% to 26,659.75. Recruit Holdings contributed the most to the Topix gain, rising 2% after its earnings report. Out of 2,172 shares in the index, 1,164 rose and 932 fell, while 76 were unchanged. Australia's S&P/ASX 200 index rose 0.3% to close at 7,112.50, taking its winning run to a third session. Miners and banks contributed the most to the gauge’s advance. Beach Energy was among the top performers, climbing with other energy shares as oil rallied. Brambles was the biggest laggard after saying CVC won’t be putting forward a proposal for the pallet maker. Investors also assessed minutes from the RBA’s May meeting. The central bank said it considered three options for the size of its first interest-rate increase since 2010. In New Zealand, the S&P/NZX 50 index fell 0.2% to 11,137.88. India’s key gauges surged on Tuesday, boosted by Reliance Industries Ltd. which climbed the most since early March. Still, Life Insurance Corp. of India, the country’s biggest listing so far, slumped on debut. The S&P BSE Sensex rose 2.5%, its biggest jump in three months, to 54,318.47 in Mumbai, while the NSE Nifty 50 Index advanced 2.6%. All of the 19 sector sub-indexes compiled by BSE Ltd. climbed, led by a gauge of metal companies. Reliance Industries advanced 4.2%, providing the biggest boost to the Sensex, which had all 30 members trading higher.  “It’s a much-needed breather for the bulls after five weeks of slide and we may further rise,” said Ajit Mishra, vice-president research at Religare Broking Ltd. “Since all the sectors are participating in the rebound, we suggest focusing more on stock selection. Despite strong gains in the broader market, shares in the state-controlled insurer plunged 7.8%, following a $2.7 billion IPO, India’s biggest on record. The stock trimmed losses from the low, but failed to touch the listing price in the session. LIC’s first-day performance makes for the second-worst debut among 11 global companies that listed this year after raising at least $1 billion through first-time share sales.  In FX, the Bloomberg Dollar Spot Index fell a third consecutive day and the greenback weakened against all of its Group-of-10 peers apart from the yen. The pound lead G-10 gains followed by Scandinavian and Antipodean currencies. The pound rallied and gilts slumped across the curve after a stronger-than-expected reading of the UK employment data stoked speculation that a tighter labor market may prompt the BOE to continue its monetary tightening cycle beyond a widely expected rate rise next month. Average weekly earnings surged 7% in the three months through March, compared to the 5.4% figure economists had expected. The euro rose on the back of a broadly weaker dollar. Bunds slid as haven demand was unwound. Italian bonds also tumbled as money markets wagered on up to 98bps of ECB hikes by December. The Aussie strengthened for a third day while Australia’s sovereign bonds fell after minutes from RBA’s May meeting indicated the central bank considered an outsized rate hike. The RBA said it considered three options for the size of its first interest-rate increase since 2010, according to minutes of its May 3 policy meeting, when it raised the cash rate by 25 basis points. The Australian and New Zealand dollars also benefitted from expectations that Covid lockdowns in Hong Kong and Shanghai will be lifted. The yen gave up earlier gains as US yields resumed their climb, which also weighed on Japan government bonds. In rates, yields rose as Treasuries cheapened with losses led by front-end of the curve, following a sharper bear flattening move across EGBs after ECB Governing Council member Klaas Knot said he supports a quarter-point increase in interest rates in July and that a bigger move may be justified if data show inflation worsening. US Treasury yields cheaper by up to 5.5bp across front-end of the curve, the 10Y TSY trading at 2.91% last and flattening 2s10s spread by 2.2bp on the day; 2-year German yields cheaper by 23bp on the day following Knot comments while German 10s are cheaper by 4bp vs. Treasuries. In U.S. session, focus on a stacked Fed speaker slate led by Chair Jerome Powell who will be interviewed during a Wall Street Journal live event in the afternoon. The Dollar issuance slate includes Export Development Canada 5Y SOFR, OKB 3Y SOFR and JICA 5Y SOFR; six deals priced $9.1n Monday in order books that were 3.3x oversubscribed In commodities, WTI drifts 0.2% higher to trade at around $114. Spot gold rises roughly $3 to trade above $1,825/oz. Base metals are mixed; LME tin falls 1.6% while LME zinc gains 2.4%. European gas prices hit four-week low after EU revised guidelines for purchases of Russian supplies. To the day ahead now, and there’s an array of central bank speakers including Fed Chair Powell, along with the Fed’s Bullard, Harker, Kashkari, Mester and Evans, ECB President Lagarde and BoE Deputy Governor Cunliffe. Data releases include US retail sales, industrial production and capacity utilisation for April, along with the NAHB’s housing market index for May. Elsewhere, there’s also the UK unemployment reading for March. Finally, earnings releases include Walmart and Home Depot. Market Snapshot S&P 500 futures up 1.3% to 4,057.75 STOXX Europe 600 up 1.6% to 440.47 MXAP up 1.4% to 162.83 MXAPJ up 2.2% to 535.18 Nikkei up 0.4% to 26,659.75 Topix up 0.2% to 1,866.71 Hang Seng Index up 3.3% to 20,602.52 Shanghai Composite up 0.6% to 3,093.70 Sensex up 2.1% to 54,080.42 Australia S&P/ASX 200 up 0.3% to 7,112.53 Kospi up 0.9% to 2,620.44 German 10Y yield little changed at 0.99% Euro up 0.4% to $1.0480 Brent Futures up 0.3% to $114.53/bbl Gold spot up 0.2% to $1,827.11 U.S. Dollar Index down 0.42% to 103.75 Top Overnight News from Bloomberg The euro-area economy grew more than initially estimated at the start of the year as the region moved past a wave of Covid-19 infections and defied headwinds from the early days of the war in Ukraine. Economic output rose 0.3% in the first quarter, exceeding a flash reading of 0.2%, according to Eurostat data released Tuesday. Employment, meanwhile, gained 0.5% during same period The UK will lay out its plan to amend its post-Brexit trade deal Tuesday in a direct challenge to the European Union, which is insisting that Prime Minister Boris Johnson must honor the agreement he signed China’s main bond trading platform for foreign investors has quietly stopped providing data on their transactions, a move that may heighten concerns about transparency in the nation’s $20 trillion debt market after record outflows The American and European Union chambers of commerce in separate briefings said their members are rethinking their supply chains and whether to expand investment in the face of China’s zero tolerance approach to combating Covid-19 Turkish President Recep Tayyip Erdogan said he won’t allow Sweden and Finland to join NATO because of their stances on Kurdish militants, throwing a wrench into plans to strengthen the western military alliance after Russia’s invasion of Ukraine A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were positive but with gains capped after the uninspiring lead from Wall St and growth concerns. ASX 200 was kept afloat by strength in the commodity-related sectors after recent gains in underlying prices. Nikkei 225 traded marginally higher with Japan seeking to pass an extra budget by month-end and will begin permitting entry to a small number of tourists. Hang Seng and Shanghai Comp were both firmer with tech spearheading the outperformance in Hong Kong amid hopes of an easing of the crackdown on the sector, while the mainland lagged amid economic concerns and despite Shanghai reporting no cases outside of quarantine for a 3rd consecutive day. Top Asian News China's state planner said China's economy faces increasing downward pressure, while it will step up support for manufacturing companies, contact-intensive services, small companies and home businesses, according to Reuters. Senior Chinese officials are to meet with tech industry chiefs today amid talk of crackdown easing, according to Nikkei. It was later reported that China's top political consultative body began a conference on promoting the sustainable and healthy development of the digital economy, according to state media. Hong Kong Chief Executive Carrie Lam said they will proceed with the planned COVID curbs easing on May 19th, according to Bloomberg. BoJ Deputy Governor Amamiya said it is important to continue current powerful easing to firmly support the economy and that long-term interest rates have been stable since the adoption of fixed-rate operations, while he added that if monetary easing is reduced now, it would make the 2% price goal an even more distant target, according to Reuters. Japan is to permit small groups of tourists to visit this month as a trial ahead of its border reopening, according to Japan Times. European bourses are firmer across the board, Euro Stoxx 50 +1.7%, taking impetus from and extending on a positive APAC handover as the regions COVID situation improves. Stateside, futures are firmer across the board, ES +1.8%, following yesterday's  relatively lacklustre session with participants awaiting numerous Fed speak, including Chair Powell. Twitter (TWTR) prospective purchaser Musk says that his offer was based on the Co.'s SEC filing being accurate, however, yesterday the CEO refused to show proof of less than 5% of fake/spam accounts; deal cannot move forward until this has been disclosed. -3.5% in the pre-market. Home Depot Inc (HD) Q1 2023 (USD): EPS 4.09 (exp. 3.67/3.67 GAAP), Revenue 38.9bln (exp. 36.71bln); Raises Fiscal 2022 Guidance. +2.5% in the pre-market Top European News UK Foreign Secretary Truss is to declare her intention to bring forward legislation that rips up parts of the post-Brexit trade deal on Northern Ireland, according to LBC. Expected around 12:30BST/07:30ET Irish Foreign Minister Coveney says he spoke with UK Foreign Minister Truss on Monday, notes the EU and UK sides haven't met since February and says it is "time to get back to the table" ECB is expected to raise the deposit rate in July according to 39 out of 39 respondents in a Reuters survey, while 26 out of 48 economists see the deposit rate at 0% in Q3 and 21 out of 48 see the deposit rate at 0.25% in Q4. FX Pound the standout G10 performer in wake of outstanding UK labour report; Cable clears string of resistance levels on the way towards 1.2500 and EUR/GBP probes 0.8400 after breaching technical supports . Kiwi and Aussie relish renewed risk appetite and latter also helped by hawkish RBA minutes; NZD/USD above 0.6350 and 1.3bln option expiries at 0.6300, AUD/USD back on 0.7000 handle. Greenback concedes ground ahead of top tier US data and raft of Fed speakers including chair Powell, DXY down to 103.470 vs 104.320 at best; latest session low in wake of ECB's Knot. Franc, Euro and Loonie all up at the expense of the Buck but latter also fuelled by WTI topping USD 115/bbl; USD/CHF sub-parity, EUR/USD surpassing 1.05 in wake of hawk-Knot and USD/CAD near 1.2800. Yen lags as risk sentiment improves and yields outside of Japan rebound firmly; USD/JPY rebounds through 129.00 and just over 129.50. Norwegian Crown boosted by Brent in stark contrast to crude import dependent Turkish Lira and Indian Rupee; EUR/NOK under 10.1500, USD/TRY touches 15.8850 and USD/INR crosses 78.0000 to set fresh ATH Fixed Income Bonds make way for risk revival and brace for US data amidst a raft of global Central Bank speakers. Bunds down to 152.74, Gilts hit 119.25 and 10 year T-note as low as 119-08 before paring some heavy declines UK DMO gets welcome reception for 2015 issuance, but new German Schatz receives cold shoulder even before hawkish comments from ECB's Knot not ruling out a 50 bp July hike if data warrants more than 25 bp China's main bond trading platform is said to have stopped the reporting of bond trades by foreigners following the market downside, according to Bloomberg. Commodities WTI and Brent are firmer in-fitting with broader risk appetite and the aforementioned China COVID improvement; posting gains of circa USD 0.80/bbl. However, upside remains capped amid the ongoing standoff between the EU and Hungary over a Russian import embargo. Iran set June Iranian light crude price to Asia at Oman/Dubai + USD 4.25/bbl, according to a Reuters source   OPEC+ production was 2.6mln below quotas in April, according to a report cited by Reuters; Russian production 1.28mln below the required level in April, sources add. Spot gold is firmer, taking impetus from the USD pressure; though, the yellow metal is yet to move out of earlier ranges. Base metals are bid on risk while Wheat declined amid reports that India is easing some of its export restrictions. Central Banks ECB's Knot says a 25bp hike in July is realistic; says a 50bp rate hike should not be excluded if data in the next few months suggests that inflation is broadening and accumulating. NBH's Virag says they will increase rates further, via Reuters citing slides. NBP's Kotecki says that interest rates will continue to move higher but it is currently difficult to define their target level. US Event Calendar 08:30: April Retail Sales Advance MoM, est. 1.0%, prior 0.5%, revised 0.7% April Retail Sales Ex Auto MoM, est. 0.4%, prior 1.1%, revised 1.4% April Retail Sales Ex Auto and Gas, est. 0.7%, prior 0.2%, revised 0.7% April Retail Sales Control Group, est. 0.7%, prior -0.1%, revised 0.7% 09:15: April Industrial Production MoM, est. 0.5%, prior 0.9% 09:15: April Manufacturing (SIC) Production, est. 0.4%, prior 0.9% 10:00: March Business Inventories, est. 1.9%, prior 1.5% 10:00: May NAHB Housing Market Index, est. 75, prior 77 Fed Speakers 08:00: Fed’s Bullard Discusses Economic Outlook 09:15: Fed’s Harker Discusses Healthcare as Economic Driver 12:30: Fed’s Kashkari Takes Part in a Moderated Townhall Discussion 14:00: Powell Interviewed During Wall Street Journal Live Event 14:30: Fed’s Mester Gives Opening Remarks to Panel on Inflation 18:45: Fed’s Evans Discusses the Economic Outlook DB's Jim Reid concludes the overnight wrap Recession fears have continued to dominate markets over the last 24 hours, but Deutsche Bank Research is still the only bank to actually forecast one in the US. The tone was set for the day after some incredibly weak data out of China that we discussed yesterday, but that was then followed up with disappointing survey data from the US, which arrived ahead of an array of central bank speakers today (including Fed Chair Powell). Although markets in Asia are bouncing a little this morning, the S&P 500 (-0.39%) last night followed up its run of 6 consecutive weekly declines with a further loss. It was another volatile day that saw stocks trade in a 1.5% range, including going into positive territory briefly in the afternoon before slipping into the close. Sector dispersion was pretty wide, with energy shares gaining +2.62% and consumer discretionary stocks falling -2.12%, led by Tesla retreating -5.88%. Tech was the next biggest laggard, with the NASDAQ (-1.20%) and FANG+ index (-1.34%) underperforming the broader universe. That still leaves the S&P 500 index around 2% above its recent closing low on Thursday, but remember that if we get another week in negative territory, it would still be the first time since 2001 that the S&P has posted 7 consecutive weekly declines. After opening the week much lower, the STOXX 600 did recover through that day to post a slight +0.04% gain yesterday, continuing its recent outperformance. The prevailing risk-off mood meant that longer-dated sovereign bond yields also ended the day lower for the most part. Those on 10yr Treasuries were down -3.6bps to close at 2.88%, having already fallen by -20.8bps over the previous week as investors priced in a growing risk of recession over Fed and inflation concerns. The decline was split between breakevens and real yields. To be fair 10yr yields have gained +3.3bps this morning in Asia, thus almost reversing yesterday's losses so far. At the short-end, the amount of tightening priced in over the near-term has subsided somewhat of late, as it seems investors are searching high and low for a Fed put following a poor run of risk asset performance and the prior relentless repricing towards a more aggressive monetary tightening. Indeed if you were to stop the month right now, it would be the first month in 10 that the rate priced in by the December 2022 meeting has actually fallen rather than risen. That’s been echoed further out the curve as well, with investors now barely expecting the Fed Funds rate to get above 3% in 2023 at all, even though inflation has proven much stickier than the consensus expected over recent months. As Chair Powell put it in an interview last week, getting inflation back to target will “include some pain”. Markets are starting to price some of that out though. Over in Europe longer-dated sovereign bond yields also moved slightly lower, including those on 10yr bunds (-0.8bps), OATs (-1.4bps) and BTPs (-0.8bps). That came as we heard from Bank of France Governor Villeroy, who said to expect “a decisive June meeting, and an active summer”, which fits into the broader debate recently whereby markets are increasingly expecting an initial hike as soon as July. This saw the 2yr bund increase +3.0bps to 0.12%. Another point of interest were also his comments on the exchange rate, saying that “A euro that is too weak would go against our price-stability objective”. In line with the broader theme this year, one asset class that wasn’t impacted by the risk-off tone was commodities, and both Brent crude (+2.41%) and WTI (+3.36%) moved back above $114/bbl yesterday. This morning, both are seeing slight losses though (-0.36% and -0.46%, respectively). There were major gains for wheat futures (+5.94%) too, which saw a significant daily rise following India’s move over the weekend to restrict their exports. And that went alongside other rises in agricultural goods yesterday including corn (+3.6%) and sugar (+2.66%), which is an incredibly important story for emerging markets in particular given the much higher share of disposable income that consumers put towards food in those countries. Another asset class that has had a bad time of late is Bitcoin, shedding another -3.58% to $29,909 yesterday. This morning it is climbing back above the $30k threshold. Marion Laboure in my team published a piece yesterday looking at the recent selloff in crypto, adding some much needed context for what this means for broader adoption efforts. See here for more. Overnight in Asia, it has been a good start for the Hang Seng (+2.23%) amid optimism that today’s meeting between China’s corporates and regulators may lead to an easing of draconian measures on tech companies. Hong Kong is also on track to ease covid curbs on May 19th, a theme that also lifted the Shanghai Composite (+0.29%) after the city reported a third day of no new infections in the broader community, a threshold that allows it to roll back some of the restrictions. The sentiment is upbeat elsewhere in Asia too, with the Nikkei (+0.35%) and the KOSPI (+0.80%) also rising. This optimism is shared by S&P 500 futures, up +0.31%. Elsewhere, it’s likely that Brexit will be back in the headlines today as UK Foreign Secretary Liz Truss is expected to make a statement to parliament announcing a new law that would override parts of the Northern Ireland Protocol. For reference, the Protocol is a part of the Brexit deal which the UK and the EU agreed ahead of the UK’s departure, but has been a persistent source of controversy since. Northern Irish unionists view it as undermining their place in the UK because it places an economic border between Northern Ireland and Great Britain, and the DUP (the second-largest party in the Northern Ireland Assembly) are refusing to help form an executive following their recent elections unless action is taken on the Protocol. The EU have continued to warn the UK against any unilateral action, and there’s been fears of an UK-EU trade war if the row gets worse. There wasn’t much in the way of data yesterday, although the Empire State manufacturing survey for May underwhelmed with a reading of -11.6 (vs. 15.0 expected), which was beneath every estimate in Bloomberg’s survey. There was some easing in the prices paid index though, which fell to a 14-month low of 73.7. To the day ahead now, and there’s an array of central bank speakers including Fed Chair Powell, along with the Fed’s Bullard, Harker, Kashkari, Mester and Evans, ECB President Lagarde and BoE Deputy Governor Cunliffe. Data releases include US retail sales, industrial production and capacity utilisation for April, along with the NAHB’s housing market index for May. Elsewhere, there’s also the UK unemployment reading for March. Finally, earnings releases include Walmart and Home Depot. Tyler Durden Tue, 05/17/2022 - 07:43.....»»

Category: blogSource: zerohedgeMay 17th, 2022

Saga Partners 1Q22 Commentary: Carvana And Redfin

Saga Partners commentary for the first quarter ended March 31, 2022. During the first quarter of 2022, the Saga Portfolio (“the Portfolio”) declined 42.4% net of fees. This compares to the overall decrease for the S&P 500 Index, including dividends, of 4.6%. The cumulative return since inception on January 1, 2017, for the Saga Portfolio […] Saga Partners commentary for the first quarter ended March 31, 2022. During the first quarter of 2022, the Saga Portfolio (“the Portfolio”) declined 42.4% net of fees. This compares to the overall decrease for the S&P 500 Index, including dividends, of 4.6%. The cumulative return since inception on January 1, 2017, for the Saga Portfolio is 112.0% net of fees compared to the S&P 500 Index of 122.7%. The annualized return since inception for the Saga Portfolio is 15.4% net of fees compared to the S&P 500’s 16.5%. Please check your individual statement as specific account returns may vary depending on timing of any contributions throughout the period. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Interpretation of Results I was not originally planning to write a quarterly update since switching to semi-annual updates a few years ago but given the current drawdown in the Saga Portfolio I thought our investors would appreciate an update on my thoughts surrounding the Portfolio and the current market environment in general. The Portfolio’s drawdown over the last several months has been hard not to notice even for those who follow best practices of only infrequently checking their account balance. Outperformance vs. the S&P 500 since inception has flipped to underperformance on a mark-to-market basis and the stock prices of our companies have continued to decline into the second quarter. In past letters I have spent a lot of time discussing the Saga Portfolio’s psychological approach to investing to help prepare for the inevitable chaos that will occur while investing in the public markets from time-to-time. It’s impossible to know why the market does what it does at any point in time. I would argue that the last two years could be considered pretty chaotic, both on the upside speculation and now what appears to be on the downside fear and panic. I will attempt to give my perspective on how events played out within the Saga Portfolio with an analogy. Let’s say that in 2019 we owned a fantastic home that was valued at $500,000. We loved it. It was in a great neighborhood with good schools for our kids. We liked and trusted our neighbors; in fact, we gave them a spare key in case of emergencies. It was the perfect home for us to live in for many years to come. Based on the neighborhood becoming increasingly attractive over time, it was likely that our home may be valued around $2 million in ~10 years from now. This is strong appreciation (15% IRR) compared to the average home, but this specific home and neighborhood had particularly strong long-term fundamental tailwinds that made this a reasonable expectation. Then in 2020 a global pandemic hit causing a huge disorientation in the housing market. For whatever reasons, the appraised value of our home almost immediately doubled to $1 million. Nothing materially changed about what we thought our home would be worth in 10 years, but now from the higher market value, the home would only appreciate at a lower 7% IRR assuming it would still be worth $2 million in 10 years. What were our options under these new circumstances? We could move and try to buy a new home that provided a higher expected return. However, the homes in the other neighborhoods that we really knew and liked also doubled in price, so they did not really provide any greater value. Also, the risk and hassle of moving for what may potentially only be modestly better home appreciation did not make sense. We could buy a home in a less desirable neighborhood where prices looked relatively cheaper, but we would not want to live long-term. Even if we decided to live there for many years, the long-term fundamental dynamics of the crummy neighborhood were weak to declining and it was uncertain if the property would appreciate at all despite its lower valuation. We could sell our home for $1 million and rent a place to live for the interim period while holding cash and waiting for the market to potentially correct. However, we did not know if, when, or to what extent the market would correct and the thought of renting a place temporarily for our family was unappealing. For the Saga family, we decided to stay invested in the home that we knew, loved, and still believed had similar, if not stronger prospects following the COVID-induced surge in demand in our neighborhood. Now, for whatever reason, the market views our neighborhood very poorly and the appraised value of our home declined to $250,000, below any previous appraisals. It seems odd because it is the exact same home and the fundamentals of the neighborhood are much stronger than several years ago, suggesting that the expected $2 million value in the future is even more probable than before. It is a very peculiar situation, but the market can do anything at any moment. Fortunately, the lower appraisal value does not impact how much we still love our home, neighborhood, schools, or what the expected future value will be. In fact, we prefer a lower value because our property taxes will be lower! One thing is for certain, we would never sell our home for $250,000 simply because the appraised value has declined from prior appraisals. We would also never dream of selling in fear that the downward price momentum continues and then hopefully attempt to buy it back one day for $200,000. We can simply sit tight for as long as we want while the neighborhood around us continues to improve fundamentally over time, fully expecting the value of our home to eventually go up with it. It just so happens humans are highly complex beings and do not always react in what an economist may consider a rational way. Our emotions are highly contagious. When someone smiles at you, the natural reaction is to smile back. When someone else is sad, you feel empathy. These are generally great innate characteristics for helping to build the strong relationships with friends and family that are so important throughout life. But it also means that when other people are scared, it also makes you feel scared. And when more and more people get scared, that fear can cascade exponentially and turn into panic, which can cause people to do some crazy things, especially when it comes to making long-term decisions. As fear spreads, all attention shifts from thinking about what can happen over the next 5-10+ years to the immediate future of what will happen over the next day or even hour. Of course, during times of panic, “this time is always different.” It may very well be the case, but the world can only end once. Historically speaking, things have tended to work out pretty well over time on average. I am by no means immune to these contagious feelings. My way of coping with how I am innately wired is by accepting this fact and then trying to know what I can and cannot control. A core part of my investing philosophy is that I do not know what the market will do next, and I never will. Inevitably the market or a specific stock will crash, as it does from time-to-time. This “not timing the market” philosophy or treating our public investments from the perspective of a private owner may feel like a liability during a drawdown, but it is this same philosophy of staying invested in companies we believe to have very promising futures which positions us perfectly for the inevitable recovery. Eventually, emotions and the business environment will normalize, and the storm will pass. It could be next quarter, year, or even in several years, but we will be perfectly positioned for the recovery, at which point the stock price lows will likely be long gone. The whole investing process improves if one can really take the long-term view. However, it is not natural for people to think long-term particularly when it comes to owning pieces of publicly traded companies. It is far more natural to want to act by jumping in and out of stocks in an attempt to outsmart others who are trying to outsmart you. When the market price of your ownership in a business is available and fluctuating wildly every single day, it is hard to ignore and not be influenced by it. While one can get lucky through speculation, the big money is made by investing, by owning great businesses and letting them compound owner’s capital over many years. As the market has evolved over the last few decades, there appears to be an ever-increasing percent of “investors” who are effectively short-term renters, turning over the companies in their portfolios so quickly that they never really know the business that lies below the surface of the stock. While more of Wall Street is increasingly focused on the next quarter, a potentially looming recession, the Fed’s next interest rate move, or trying to time the market’s rotation from one industry into another, we are trying to think about what our companies’ results will be in the year 2027, or better yet 2032 and beyond. The most significant advantage of investing in the public market is the ability to take advantage of it when an opportunity presents itself or to ignore the market when there is nothing to do. The key to success is never giving up this advantage. You must be able to play out your hand and not be forced to sell your assets at fire sale prices. Significant portfolio declines are a good reminder of the importance of only investing money that you will not need for many years. This prevents one from being in a position where it is necessary to liquidate when adverse psychology has created unusually low valuations. However, we do not want to simply turn a blind eye to stock price declines of 50% or more and dig our heals into the ground believing the market is just being irrational. When the world is screaming at you that it believes your part ownership in these companies is worth significantly less than the market believed not too long ago, we attempt to understand if we are missing something by continually evaluating the long-term outlooks of our companies using all the relevant information that we have today from a first principles basis. Portfolio Update Instead of frequently checking a stock’s price to determine whether the company is making progress, I prefer looking to the longer-term trends of the business results. There will be stronger and weaker quarters and years since business success rarely moves up and to the right in a perfectly straight line. As a company faces headwinds or tailwinds from time-to-time, the stock price may fluctuate wildly in any given year, however the underlying competitive dynamics and business models that drive value will typically change little. Regarding our companies as a whole, first quarter results reflected a general softness in certain end markets, including the used car, real estate, and advertising markets. However, the Saga Portfolio’s companies, on average, provide a superior customer value proposition difficult for competitors to match. Most of them have a cost advantage compared to competitors; therefore, the worse it gets for the economy, the better it gets for our companies’ respective competitive positions over the long-term. For example, first quarter industry-wide used car volumes declined 15% year-over-year while Carvana’s retail units increased 14%. Existing home sales decreased 5% during the quarter while Redfin’s real estate transactions increased 1%. Digital advertising is expected to grow 8-14% in 2022 while the Trade Desk grew Q1’22 revenues 43% and is expected to grow them more than 30% for the full year 2022. While industry-wide TV volumes remain below 2019 pre-COVID levels, Roku gained smart TV market share sequentially during the quarter, continuing to be the number one TV operating system in the U.S. and number one TV platform by hours streamed in North America. Weaker industry conditions will inevitably impact our companies’ results; however, our companies should continue to take market share and come out on the other side of any potential economic downturn stronger than when they went in. For the portfolio update, I wanted to provide a more in-depth update on Carvana and Redfin which have both experienced particularly large share price declines and have recent developments that are worth reviewing. Carvana I first wrote about Carvana Co (NYSE:CVNA) in this 2019 write-up. I initially explained Carvana’s business, superior value proposition compared to the traditional dealership model, attractive unit economics, and how they were uniquely positioned to win the large market opportunity. Since then, Carvana has by far exceeded even my most optimistic initial expectations. While the company did benefit following COVID in the sense that customers’ willingness to buy and sell cars through an online car dealer accelerated, the operating environment over the last two years has been very challenging. Carvana executed exceedingly well considering the shifting customer demand in what is a logistically intensive operation and what has been a tight inventory environment due to supply chain issues restricting new vehicle production. Sales, gross profits, and retail units sold have grown at a remarkable 104%, 151%, and 87% CAGR over the last five years, respectively. Source: Company filings Shares have come under pressure following their first quarter results, which reflected larger than expected losses. The quarter was negatively impacted by a combination of COVID-related logistical issues in their network that started towards the end of the fourth quarter as Omicron cases spread. Employee call off rates related to Omicron reached an unprecedented 30% that led to higher costs and supply chain bottlenecks. As less inventory was available due to these problems, it led to less selection and longer delivery times, lowering customer conversion rates. Additionally, interest rates increased at a historically fast rate during the first quarter which negatively impacted financing gross profits. Carvana originates loans for customers and then sells them to investors at a later date. If interest rates move materially between loan origination and ultimately selling those loans, it can impact the margin Carvana earns on underwriting those loans. Industry-wide used car volumes were also down 15% year-over-year during the first quarter. While Carvana continues to grow and take market share, its retail unit volume growth was slower than initially anticipated, up only 14% year-over-year. Carvana has been in hyper growth mode since inception and based on the operational and logistical requirements of the business, typically plans, builds, and hires for expected capacity 6-12 months into the future. This has historically served Carvana well given its exceptionally strong growth, but when the company plans and hires for higher capacity than what occurs, it can lead to lower retail gross profits and operating costs per unit sold. When combined with lower financing gross profits in the quarter from rising interest rates, losses were greater than expected. In February, Carvana announced a $2.2 billion acquisition of ADESA (including an additional $1 billion plan to build out the reconditioning sites) which had been in the works for some time. ADESA is a strategic acquisition to help accelerate Carvana’s footprint expansion across the country, growing its capacity from 1.0 million units at the end of Q1’22 to 3.2 million units once complete over the next several years. It is unfortunate the acquisition timing followed a difficult quarter that had greater than expected losses, combined with a generally tighter capital market environment. Carvana ended up raising $3.25 billion in debt ($2.2 billion for the acquisition and $1 billion for the buildout) at a higher than initially expected 10.25% interest rate. Given these higher financing costs and first quarter losses, they issued an additional $1.25 billion in new equity at $80 per share, increasing diluted shares outstanding by ~9%. Despite the short-term speedbumps surrounding logistical issues, softer industry-wide demand, and a higher cost of capital to acquire ADESA, Carvana’s long-term outlook not only remains intact but looks even more promising than before. To better understand why this is the case and where Carvana is in its lifecycle, it helps to provide a little background on the history of retail. While e-commerce is a more recent phenomena that developed from the rise of the internet in the 1990s, the retail industry has undergone several transformations throughout history. In retailing, profitability is determined by two factors: the margins earned on inventory and the frequency with which they can turn inventory. Each successive retail transformation had a similar economic pattern. The newer model had greater operating leverage (higher fixed costs, lower variable costs). This resulted in greater economies of scale (lower cost per unit) and therefore greater efficiency (higher asset turnover) with size that enabled them to charge lower prices (lower gross margins) than the preceding model and still provide an attractive return on capital. The average successful department store earned gross margins of ~40% and turned inventory about 3x per year, providing ~120% annual return on the capital invested in inventory. The average successful big box retailer earned ~20% gross margins and turned its inventory 5x per year. Amazon retail earns ~10% gross margins (including fulfillment costs in COGS) and turns inventory at a present rate of 12x times annually. The debate that surrounds any subscale retailer, particularly in e-commerce, is whether they have enough capital/runway to build out the required infrastructure and then scale business volume to spread fixed costs over enough units. Before reaching scale, analysts may point to an online business’ lower price points (“how can they charge such low prices?!”), higher operating costs per unit (“they lose so much money per item!”), and ongoing losses and capital investments (“they spend billions of dollars and still have not made any money!”) as evidence that the model does not make economic sense. Who can blame them since the history books are filled with companies that never reached scale? However, if the retailer does build the infrastructure and there is sufficient demand to spread fixed costs over enough volume, the significant capital investment and high operating leverage creates high barriers to entry. If we look to Amazon as the dominant e-commerce company today, once the infrastructure is built and reaches scale, there is little marginal cost to serve any prospective customer with an internet connection located within its delivery footprint. For this reason, I have always been hesitant to invest in any e-commerce company that Amazon may be able to compete with directly, which is any mid-sized product that fits in an easily shippable box. As it relates to used car retailing, the infrastructure required to ship and recondition cars is unique, and once built, the economies of scale make it nearly impossible for potential competitors to replicate. Carvana is in the very early stages of building out its infrastructure. There is clearly demand for its attractive customer value proposition. It has demonstrated an ability to scale fixed costs in earlier cohorts as utilization of capacity increases, providing attractive unit economics at scale. Newer market cohorts are tracking at a similar, if not faster market penetration rate as earlier cohorts. Carvana is still investing heavily in building out a nationwide hub-and-spoke transportation network and reconditioning facilities. In 2021 alone, Carvana grew its balance sheet by $4 billion as it invested in its infrastructure while also reaching EBITDA breakeven for the first time. The Amazon story is a prime example (pun intended) of a new and better business model (more attractive unit economics) that delivered a superior value proposition and propelled the company ahead of its competition, similar to the underlying dynamics occurring in the used car industry today. Amazon invested heavily in both tangible and intangible growth assets that depressed earnings and cash flow in its earlier years (and still today) while growing its earning power and the long-term value of the business. The question is, does Carvana have enough capital/liquidity to build out its infrastructure and scale business volume to then generate attractive profits and cash flow? Following Carvana’s track record of scaling operating costs and reaching EBITDA breakeven in 2021, the market was no longer concerned about its liquidity position or the sustainability of its business model. However, the recent quarterly loss combined with taking on $3 billion in debt to buildout the 56 ADESA locations across the country raises the question of whether Carvana has enough liquidity to reach scale. Carvana’s current stock price clearly reflects the market discounting the probability that Carvana will face liquidity issues and therefore have to raise further capital at unfavorable terms. However, I think if you look a little deeper, Carvana has clearly demonstrated highly attractive unit economics. It has several levers to pull to protect it from any liquidity concerns if needed. The $2.6 billion in cash (as well as $2 billion in additional available liquidity in unpledged real estate and other assets) it has following the ADESA acquisition, is more than enough to sustain a potentially prolonged decline in used car demand. The most probable scenario over the next several quarters is that Carvana will address its supply chain and logistical issues that were largely due to Omicron. As the logistical network normalizes, more of Carvana’s inventory will be available to purchase on their website with shorter delivery times, which will increase customer conversion rates. This will lead to selling more retail units, providing higher inventory turnover and lower shipping costs, and therefore gross profit per unit will recover from the first quarter lows. Other gross profit per unit (which primarily includes financing) will also normalize in a less volatile interest rate environment. Combined total gross profit per unit should then approach normalized levels by the end of the year/beginning of 2023 (~$4,000+ per unit). Like all forms of leverage, operating leverage works both ways. For companies with higher operating leverage, when sales increase, profits will increase at a faster rate. However, if sales decrease, profits will decrease at a faster rate. While Carvana has high operating leverage in the short-term, they do have the ability adjust costs in the intermediate term to better match demand. When demand suddenly shifts from plan, it will have a substantial impact on current profits. First quarter losses were abnormally high because demand was lower than expected. Although, one should not extrapolate those losses far into the future because Carvana has the ability to better adjust and match its costs structure to a lower demand environment if needed. As management better matches costs with expected demand, operating costs as a whole will remain relatively flat if not decline throughout the year as management has already taken steps to lower expenses. As volumes continue to grow at the more moderate pace reflected in the first quarter and SG&A remains flat to slightly declining, costs per unit will decline with Carvana reaching positive EBITDA per unit by the second half of 2023 in this scenario. Source: Company filing, Saga Partners Source: Company filing, Saga Partners With the additional $3.2 billion in debt, Carvana will have a total interest expense of ~$600 million per year, assuming no paydown of existing revolving facilities or net interest income on cash balances. Management plans on spending $1 billion in capex to build out the ADESA locations. They are budgeting for ~$40 million in priority and elective capex per quarter going forward suggesting the build out will take ~6 years. Total capex including maintenance is expected to be $50 million a quarter. Carvana would reach positive free cash flow (measured as EBITDA less interest expense less total Capex) by 2025. Note this assumes the used car market remains depressed throughout 2022 and then Carvana’s retail unit growth increases to 25% a year for the remainder of the forecast and no benefit in lower SG&A or increased gross profit per unit from the additional ADESA locations was assumed. Stock based compensation was included in the SG&A below so actual free cash flow would be higher than the chart indicates. Source: Company filings, Saga Partners Note: Free cash flow is calculated as EBITDA less interest expense less capex After the close of the ADESA acquisition, Carvana has $2.6 billion in cash (plus $2 billion in additional liquidity from unpledged assets if needed). Assuming the above scenario, Carvana has plenty of cash to endure EBITDA losses over the next year and a half, interest payments, and capex needs. Source: Company filings, Saga Partners The above scenario does not consider the increasing capacity that Carvana will have as it continues to build out the ADESA locations. After building out all the locations, Carvana will be within one hundred miles of 80% of the U.S. population. This unlocks same-day and next-day delivery to more customers, leading to higher customer conversion rates, higher inventory turn, lower risk of delivery delays, and lower shipping costs, which all contribute to stronger unit economics. Customer proximity is key. Due to lower transport costs, faster turnaround times on acquired vehicles, and higher conversion from faster delivery speeds, a car picked up or delivered within two hundred miles of a recondition center generates $750 more profit than an average sale. It is possible that industry-wide used car demand remains depressed or even worsens for an extended period. If this were the case, management has the ability to further optimize for efficiency by lowering operating costs to better match demand. This is what management did following the COVID demand shock in March 2020. The company effectively halted corporate hiring and tied operational employee hours to current demand as opposed to future demand. During the months of May and June 2020, SG&A (ex. advertising expense and D&A) per unit was $2,600, far lower than the $3,440 reported in 2020 or $3,654 in 2021. Carvana has also historically operated between 50-60% capacity utilization, indicating further room to scale volumes across its existing infrastructure without the need for materially greater SG&A expenses. Advertising expense in older cohorts reached ~$500 per unit, compared to the $1,126 reported for all of 2021, while older cohorts still grew at 30%+ rates. If needed, Carvana could improve upon the $2,600 SG&A plus $500 advertising expense ($3,100 in total) per unit at its current scale and be far below gross profit per unit even if used car demand remains depressed for an extended period of time. When management optimizes for efficiency as opposed to growth, it has the ability to significantly lower costs per unit. Carvana has highly attractive unit economics and I fully expect management will take the needed measures to right size operating costs with demand. They recently made the difficult decision to layoff ~2,500 employees, primarily in operations, to better balance capacity with the demand environment. If we assume it takes six years to fully build out the additional ADESA reconditioning locations, Carvana will have a total capacity of 3.2 million units in 2028. If Carvana is running at 90% utilization it could sell 2.9 million retail units (or ~7% of the total used car market). If average used car prices decline from current levels and then follow its more normal longer-term price appreciation trends, the average 2028 Carvana used car price would be ~$23,000 and would have a contribution profit of ~$2,000 per unit at scale. This would provide nearly $5.6 billion in EBITDA. After considering expected interest expense, maintenance capex, and taxes, it would provide over $4 billion in net income. If Carvana realizes this outcome in six years, the company looks highly attractive (perhaps unreasonably attractive) compared to its current $7 billion market cap or $10 billion enterprise value (excluding asset-based debt). Redfin I recently wrote about Redfin Corp (NASDAQ:RDFN) in this December 2021 write-up. I explained how Redfin has increased the productivity of real estate agents by integrating its website with its full-time salaried agents and then funneling the demand aggregated on its website to agents. Redfin agents do not have to spend time prospecting for business but can rather spend all their time servicing clients throughout the process of buying and selling a home. Since Redfin agents are three times more productive than a traditional agent, Redfin is a low-cost provider, i.e., it costs Redfin less to close a transaction than a traditional brokerage at scale. It is a similar concept as the higher operating leverage of e-commerce relative to brick & mortar retailers. Redfin has higher operating leverage compared to the traditional real estate brokerage. Real estate agents are typically contractors for a brokerage. They are largely left alone to run their own business. Agents have to prospect for clients, market/advertise listings, do showings, and service clients throughout each step of the real estate transaction. Everything an agent does is largely a variable cost because few of their tasks are automated. Redfin, on the other hand, turned prospecting for demand, marketing/advertising listings, and investments in technology to help agents and customers throughout the transaction into more of a fixed cost. These costs are scalable and become a smaller cost per transaction as total transaction volumes grow across the company. Because Redfin is a low-cost provider, it has a relative advantage over traditional brokerages. No other real estate brokerage has lowered or attempted to lower the costs of transacting real estate in a similar way. This cost advantage provides Redfin with options about how to share these savings on each transaction. Redfin has primarily shared the cost savings with customers by charging lower commission rates than traditional brokerages. By offering a similar, if not superior, service to customers compared to other brokerages yet charging lower fees, it naturally attracts further demand which then provides Redfin with the ability to scale fixed costs per transaction even more, further widening their cost advantage to other brokerages. So far, the majority of those cost savings are shared with home sellers as opposed to homebuyers. Sellers are more price sensitive than homebuyers because the buyer’s commission is already baked into the seller’s contract and therefore buyers have not directly paid commissions to agents historically. Also, growing share of home listings is an important component of controlling the real estate transaction. The seller’s listing agent is the one who controls the property, decides who sees the house, and manages the offers and negotiations. Therefore, managing more listings enables Redfin to have more control over the transaction and further streamline/reduce inefficiencies for the benefit of both potential buyers and sellers. Redfin also spends some of their cost savings by reinvesting them back into the company by hiring software engineers to build better technology to continue to lower the cost of the transaction. This may include building tools for agents to service clients better, improving the web portal and user interfaces, on-demand tours for buyers to see homes first, automation to give homeowners an immediate RedfinNow offer, etc. Redfin also invests in building other business segments like mortgage, title forward, and iBuying which provide a more comprehensive real estate offering for customers which attracts further demand. So far, the lower costs per transaction have not been shared with shareholders in the form of dividends or share repurchases, and for good reason. In theory, Redfin could charge industry standard prices and increase revenue immediately by 30-40% which would drop straight to the bottom-line assuming demand would remain stable. However, giving customers most of the savings through lower commissions has obviously been one of the drivers for attracting demand and growing transaction volume, particularly for home sellers. The greater the number of transactions, the lower the fixed costs per transaction, which further increases Redfin’s cost advantage compared to traditional brokerages, which provides Redfin with even more money per transaction to share with either customers, employees, and eventually shareholders. With just over 1% market share, Redfin should be reinvesting in growing share which will increase the value of the business and inevitably benefit long-term owners of the company. Redfin’s stock price has experienced an especially large decline this year. I typically prefer to not attempt to place an explanation or narrative on short-term stock price movements, but I will do it anyways given the substantial drop. There are primarily two factors contributing to the market’s negative view of the company: first, the market currently dislikes anything connected to the real estate industry and second, the market currently has little patience for any company that reports net losses regardless of the underlying economics of the business. Real estate is currently a hated part of the market, and potentially for good reason. It is a cyclical industry, and the economy is potentially either entering or already in a recession. Interest rates are expected to continue to rise, negatively impacting home affordability, while an imbalance in the housing supply persists with historically low inventory available helping fuel an unsustainable rise in housing prices. From a macro industry-wide perspective, the real estate market will ebb and flow with the economy over time, but demand to buy, sell, and finance homes will always exist. I do not have the ability to determine how aggregate demand for buying or selling a home will change from year-to-year, but I do know that people have to live somewhere and if Redfin is able to help them find, buy or rent, and finance where they live better than alternative service providers, then the company will gain share and grow in value overtime. Redfin has also reported abnormally high losses of $91 million in the first quarter for which the current market has little appetite. It feeds the argument that Redfin does not have a sustainable business model. While losses can be a sign of unsustainable economics, that is not the case for Redfin. There are several factors that are all negatively hitting the income statement at the same time, and all should improve materially over the next year or two. Higher first quarter losses largely reflect: Agent Productivity: First quarter brokerage sales increased 7% year-over-year, but lead agent count increased 20%, which meant agents were less productive, leading to real estate gross profits declining $17 million from the prior year. Lower productivity was a result of a steeper ramp in agent hiring towards the end of the year against lower seasonal transaction volumes. It typically takes about six months for new agents to get trained and start closing transactions and then contributing to gross profits. Any accelerated hiring, particularly during a softer macro environment, will be a headwind while Redfin is paying upfront costs before any revenue is being generated. Further, closing transactions has been difficult particularly for buyers, which is where most new agents start. The housing market has been unbalanced where there is not enough inventory. A home for sale will typically receive many competing offers which makes it difficult for a buyer to win the deal. Since Redfin agents are mostly paid on commission (~20% salary plus the remainder being commission), it has been more difficult for new agents to earn a sufficient income in the current real estate environment. In response, Redfin started paying $1,500 retention bonuses for new agents who could guide customers to the point of bidding on a home, regardless of whether those bids win. While the bonus may impact gross profits in the near-term before a customer closes a transaction, it will not impact gross margins in the long-term when a transaction eventually takes place. Going forward, agent hiring will return to more normal rates and the larger number of new hires from recent quarters will ramp up which will improve productivity and gross profits. RentPath: Redfin bought RentPath out of bankruptcy for $608 million in April 2021, primarily to incorporate its rentals on its website which helps Redfin.com show up higher on Internet real estate searches. Prior to the acquisition, RentPath had no leadership direction for several years and declining sales and operating losses. RentPath had new management start in August 2021 and was integrated into Redfin.com in March. It finally started to see operational improvement with sales increasing in February and March year-over-year for the first time since 2019 despite a significant decrease in marketing expenses. While RentPath had $17 million in losses during the first quarter and is expected to have $22 million in losses in the second quarter, operations will improve going forward. Management made it clear that RentPath will be a contributor to net profits in its own right and not just a driver of site traffic and demand to Redfin’s brokerage business. Mortgage: A recent major development was the acquisition of Bay Equity for $135 million in April. Redfin was historically building out its mortgage business from scratch but after struggling to scale the operation decided to buy Bay Equity. Redfin was spending $13 million per a year on investing in its legacy mortgage business but going forward, mortgage will now be a net contributor to profits with Bay expected to provide $4 million in profit in the second quarter. The greater implication of having a scaled mortgage underwriter that is integrated with the real estate broker is that they can work together to streamline and expedite the transaction closing which has become an increasingly important value proposition for customers. Looking just a little further into the future, having a scaled and integrated mortgage underwriter can provide Redfin with the capability of providing buyers with the equivalent of an all-cash offer to sellers. Prospective homebuyers who offer all-cash offers to sellers are four times as likely to win the bid and sellers will often accept a lower price from an all-cash buyer vs. one requiring a mortgage. A common problem that many homeowners face is that when they are looking to move, it is difficult to get approved for a second mortgage while holding the current one. Much of their equity is locked in their current home. Frequently, a homebuyer wins an offer on a new home and then is in mad dash to sell their existing home in order to get the financing to work. It is not ideal to attempt to sell your home as fast as possible because it decreases the chance of getting the best price possible. A solution that Redfin could offer as a customer’s agent and underwriter is provide bridge financing between when a customer buys their new home and is then trying to sell their existing home and is therefore paying on two mortgages. Redfin would be able to make a reasonable appraisal for what a customer’s existing home will sell for (essentially what Redfin already does with iBuying) and underwriting the incremental credit exposure they are willing to provide the buyer. The buyer would then have “Redfin Cash” which would work like a cash offer. If this service helps buyers win a bid four times more often, it would even further differentiate Redfin’s value proposition and attract further demand. At least in the near-term, the mortgage segment will go from being a loss center to a contributor to net profits as well as further improving Redfin’s customer value proposition. Restructuring and transaction costs: Redfin had $6 million in restructuring expenses related to severance with RentPath and the mortgage business as well as closing the Bay Equity acquisition. $4 million in restructuring expenses are expected in the second quarter but these expenses will go away in future quarters. The combination of the above factors provided the headline $91 million net loss for the first quarter. Larger than normal losses between $60-$72 million are still expected in the second quarter. However, going forward losses are expected to continue to improve materially. While Redfin is not done investing in improving its service offerings, it should benefit from the significant investments it has already made over the last 16 years. Redfin has been building and supporting a nationwide business that only operated in parts of the country and had to incur large upfront costs. Going forward, it will benefit from the operating leverage baked into its cost structure with gross profits expected to grow twice as fast as overhead operating expenses. Redfin is expected to be cash flow breakeven in 2022 and provide net profits starting in 2024. Redfin has built a great direct to consumer acquisition tool that is unmatched by any real estate broker. It has spent the costs to acquire the customer and has now built out the different services to provide customers any of the real estate services that they may need, whether that is one or a combination of brokerage services, mortgage underwriting, title forward, iBuying, or rental search. Being able to monetize each customer that it has already acquired by offering them any of these services provides Redfin with a better return on customer acquisition costs that no other competitor is able to do to the same extent. Additionally, these real estate services work better when they are integrated under the same company. One does not have to dig very deep to see how attractive Redfin’s shares are currently priced. Shares are now selling around all-time historic lows since its IPO in August 2017. The prior all-time lows were reached during the COVID crash which was a time the world was facing an unknown pandemic that would shut down the economy and potentially put us through a great depression. At its current $1.2 billion market cap, Redfin is selling for 3x expected 2022 real estate gross profits, or 4x its current $1.7 billion enterprise value (excluding asset-based debt). Both are far below the historic average of 15x (which excludes peak multiples reached towards the end of 2020 and early 2021), or the previous all-time low of 6x reached in the depths of March 2020. If we assume Redfin can raise brokerage commissions by 30%, in line with traditional brokerage commission rates, and it does not lose business, Redfin would be able to provide ~20% operating margins. If we take a more conservative view and say Redfin can earn 10% net margins on its 2022 expected real estate revenues of $990 million, it would provide $99 million in net profits, providing a current 12x price-to-earnings ratio. This is for a company that has a long track record of being able to grow 20%+ a year on average, consistently gains market share each quarter, and has barely monetized its significant upfront investments and fixed costs with a long runway to continue to scale. This also does not place any value on its mortgage or iBuying segments which are now contributors to gross profits. There may be macro risks as well as other concerns today, however Redfin’s business and relative competitive advantage have never been stronger. The net losses reported are not representative of Redfin’s true underlying earning power. Redfin has untapped pricing power, an increasingly attractive customer value proposition, and a growing competitive advantage compared to alternative brokerages, which will help Redfin to continue to grow and take market share in what is a very large market. Conclusion Of course, the future can look scary, as it often does when headlines jump from one risk to the other. Despite what may be happening in the macro environment, our companies on average are stronger than they have ever been and are now selling for what we believe are the most attractive prices we have seen relative to their intrinsic value. I have no idea what shares will do in the near-term and I never will. Stock prices can swing wildly for many reasons, and sometimes seemingly for no reason at all. They can diverge, sometimes significantly from their true underlying value. I have no idea when sentiment will shift from optimism to pessimism and then back to optimism. This is what keeps us invested in both good times and in bad. The current selloff can continue further, but assuming our companies continue to execute over the coming years by winning market share and earning attractive returns on their investment spending, the market’s sentiment surrounding our portfolio companies will eventually reflect their underlying fundamentals. I will continue to look towards the longer-term operating results of our companies and not to the movements in their stock price as feedback to whether our initial investment thesis is playing out as expected. While the market can ignore or misjudge business success for a certain period, it eventually has to realize it. During times of greater volatility and periods of large drawdowns, I am reminded of how truly important the quality of our investor base is. It is completely natural to react in certain ways to rising or declining stock prices. It takes a very special investor base to look past near-term volatility and to trust us to make very important decision on their behalf as we continually try to increase the value of the Saga Portfolio over the long-term. As always, I am available to catch up or discuss any questions you may have. Sincerely, Joe Frankenfield Saga Partners Updated on May 16, 2022, 4:44 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkMay 17th, 2022

Kornit Digital Reports First Quarter 2022 Results

First quarter revenues of $83.3 million, net of non-cash warrants impact of $8.0 million; up 26% year-over-year First quarter GAAP operating loss of $6.9 million; Non-GAAP operating loss of $0.7 million, net of $8.0 million attributed to the non-cash impact of warrants Exceptional quarter for Presto and overall systems sales Excellent adoption and feedback for Atlas Max Record quarter in Asia Pacific; Strong performance in EMEA and Americas Ground-breaking new product introductions unveiled at Kornit Fashion Week - Tel Aviv including Atlas MAX Poly and Kornit Apollo Gearing up for Kornit Fashion Week – London – May 15th – 17th, and FESPA Berlin   ROSH-HA'AYIN, Israel, May 11, 2022 (GLOBE NEWSWIRE) -- Kornit Digital Ltd. (NASDAQ:KRNT), a worldwide market leader in sustainable, on-demand, digital fashionx and textile production technologies, reported today results for the first quarter ended March 31, 2022. "We are pleased to have delivered a good start to the year and are excited about our tremendous period of ground-breaking new product introductions," said Ronen Samuel, Kornit Digital's Chief Executive Officer. "During the quarter, we made significant progress with some of the largest and most respected global brands and retailers, supported our global strategic account with major expansion and capacity initiatives, and introduced some of the most innovative and disruptive systems and solutions to the market." Mr. Samuel concluded, "The tailwinds driving the industry to on-demand sustainable production are intensifying with an accelerated level of focus to shifting a substantial amount of impressions to nearshore, short-medium run production, addressing evolving online and retail business models. We believe our unmatched portfolio of mass-production MAX solutions, including our recently announced Kornit Apollo - all powered by our unique KornitX platform – place Kornit in a great position to capitalize on these evolving and accelerating market opportunities and trends. While we are certainly not immune to overall macro-economic headwinds and near-term volatility, which we see impacting our second quarter growth, we continue to expect to deliver, ahead of plan, on the $125 million run-rate business we originally targeted for the fourth quarter 2023 and remain confident in our journey to become a billion-dollar business in 2026." The following table compares the adverse, non-cash impact that the Company's outstanding warrants had on the Company's results of operations during the first quarters of 2022 and 2021, respectively:   First Quarter Warrants Impact         Three Months Ended   March 31,   2022   2021   Net of Warrants Impact   Warrants Impact   Net of Warrants Impact   Warrants Impact                 Revenue   $83.3M       $8.0M       $66.1M       $3.1M   Non-GAAP Gross Margin   41.5 %     5.1 %     47.1 %     2.4 % Non-GAAP Operating Margin   (0.8 %)     8.8 %     9.8 %     4.1 % Non-GAAP Net Margin   0.2 %     8.8 %     11.7 %     4.0 % Non-GAAP Diluted Earnings Per Share $ 0.00     $ 0.16     $ 0.16     $ 0.07                                   "During the first quarter, we saw good diversification across the business and strong revenue performance in all regions," said Alon Rozner, Kornit Digital's Chief Financial Officer. "With a pipeline of opportunities, we continue to strategically invest in the business to support our new industry leading product initiatives and go-to-market strategies to generate profitable, long-term growth. Given our proactive supply chain initiatives, we remain confident in our ability to deliver on all our 2022 customer commitments and continue to leverage our strong balance sheet to secure 2023 requirements." First Quarter 2022 Results of Operations Total revenue for the first quarter of 2022 was $83.3 million, net of $8.0 million attributed to the non-cash impact of warrants, compared to $66.1 million, net of $3.1 million attributed to the non-cash impact of warrants in the prior year period. GAAP net loss for the first quarter of 2022 was $5.2 million, or $0.10 per basic share, compared to net income of $5.1 million, or $0.11 per share, for the first quarter of 2021. Non-GAAP net income for the first quarter of 2022 was $0.2 million, or $0.00 per diluted share, net of $0.16 per diluted share attributed to the non-cash impact of warrants, compared to non-GAAP net income of $7.7 million, or $0.16 per diluted share, net of $0.07 per diluted share attributed to the non-cash impact of warrants, for the first quarter of 2021. Second Quarter 2022 Guidance For the second quarter of 2022, the Company expects revenue to be in the range of $85 million to $95 million; non-GAAP operating income to be in the range of -2% to +2% of revenue; EBITDA Margins to be in the range of 0% to 4%. Consistent with past practice, this guidance excludes the impact of the fair value of issued warrants in the quarter. The Company expects revenues in the third and fourth quarters to be stronger than the second quarter. The Company further expects higher operating margins in the second half of the year, with operating margins in the third and fourth quarters in the low to mid-teens. First Quarter Earnings Conference Call Information The Company will host a conference call today at 8:30 a.m. ET, or 3:30 p.m. Israel time, to discuss the results, followed by a question-and-answer session with the investment community. A live webcast of the call can be accessed at ir.kornit.com. To access the call, participants may dial toll-free at 1-877-407-0792 or +1-201-689-8263. The toll-free Israeli number is 1-809-406-247. The conference confirmation code is 13729422. To listen to a replay of the conference call, dial toll-free 1-844-512-2921 or +1-412-317-6671 (international) and enter confirmation code 13729422. The telephonic replay will be available approximately two hours after the completion of the live call, 11:59 p.m. ET on Wednesday, May 25, 2022. The call will also be available for replay via the webcast link on Kornit's Investor Relations website. Forward Looking Statements Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and other U.S. securities laws. Forward-looking statements are characterized by the use of forward-looking terminology such as "will," "expects," "anticipates," "continue," "believes," "should," "intended," "guidance," "preliminary," "future," "planned," or other words. These forward-looking statements include, but are not limited to, statements relating to the Company's objectives, plans and strategies, statements of preliminary or projected results of operations or of financial condition and all statements that address activities, events, or developments that the Company intends, expects, projects, believes or anticipates will or may occur in the future. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. The Company has based these forward-looking statements on assumptions and assessments made by its management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Important factors that could cause actual results, developments and business decisions to differ materially from those anticipated in these forward-looking statements include, among other things: the Company's degree of success in developing, introducing and selling new or improved products and product enhancements including specifically the Company's Poly Pro and Presto products; the extent of the Company's ability to consummate sales to large accounts with multi-system delivery plans; the degree of the Company's ability to fill orders for Kornit's systems; the extent of the Company's ability to continue to increase sales of Kornit's systems, ink and consumables; the extent of the Company's ability to leverage Kornit's global infrastructure build-out; the development of the market for digital textile printing; the availability of alternative ink; competition; sales concentration; changes to the Company's relationships with suppliers; the extent of the Company's success in marketing; the duration and severity of the macro-economic impacts triggered by the global COVID-19 pandemic, such as supply-chain delays and inflationary pressures, which could potentially impact, in a material adverse manner, the Company's operations, financial position and cash flows, and those of the Company's customers and suppliers; and those additional factors referred to under "Risk Factors" in Item 3.D of the Company's Annual Report on Form 20-F for the year ended December 31, 2021, filed with the SEC on March 30, 2022. Any forward-looking statements in this press release are made as of the date hereof, whether as a result of new information, future events or otherwise, except as required by law. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. Kornit urges investors to review the reconciliation of non-GAAP financial measures to the comparable GAAP financial measures included below, and not to rely on any single financial measures to evaluate its business. A reconciliation for non-GAAP operating income guidance set forth above is not provided because, as forward-looking statements, such reconciliation is not available without unreasonable effort due to the high variability, complexity, and difficulty of estimating certain items such as charges to share-based compensation expense and currency fluctuations which could have an impact on its consolidated results. Kornit believes the information provided is useful to investors because it can be considered in the context of Kornit's historical disclosures of this measure. Non-GAAP Discussion Disclosure Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude the impact of share-based compensation expenses, acquisition related expenses, foreign exchange differences associated with ASC 842, amortization of acquired intangible assets, and the related tax effect of the foregoing. The purpose of such adjustments is to provide an indication of the Company's performance exclusive of non-cash charges and other items that are considered by management to be outside of the Company's core operating results. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Furthermore, the non-GAAP measures are regularly used internally to understand, manage, and evaluate the Company's business and make operating decisions, and the Company believes that they are useful to investors as a consistent and comparable measure of the ongoing performance of the Company's business. However, the Company's non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies. About Kornit Kornit Digital (NASDAQ:KRNT) is a worldwide market leader in sustainable, on-demand, digital fashionx and textile production technologies. The company is writing the operating system for fashion with end-to-end solutions including digital printing systems, inks, consumables, and an entire global ecosystem that manages workflows and fulfillment. Headquartered in Israel with offices in the USA, Europe, and Asia Pacific, Kornit Digital serves customers in more than 100 countries and states worldwide. To learn more about how Kornit Digital is boldly transforming the world of fashion and textiles, visit www.kornit.com. Investor Contact:Andrew G. BackmanGlobal Head of Investor Relationsandrew.backman@kornit.com KORNIT DIGITAL LTD. AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (U.S. dollars in thousands)     March 31,   December 31,       2022       2021       (Unaudited)     ASSETS         CURRENT ASSETS:         Cash and cash equivalents   $ 77,284     $ 611,551   Short-term bank deposit     420,153       9,168   Marketable securities     19,597       28,116   Trade receivables, net     80,990       49,797   Inventory     71,360       63,017   Other accounts receivable and prepaid expenses   16,061       13,694   Total current assets     685,445       775,343             LONG-TERM ASSETS:         Marketable securities   $ 216,856     $ 149,269   Deposits and other long-term assets     850       856   Severance pay fund     361       357   Deferred taxes     11,792       9,339   Property, plant and equipment, net     46,412       45,046   Operating lease right-of-use assets     29,388       25,155   Intangible assets, net     9,535       10,063   Goodwill     25,447       25,447   Total long-term assets     340,641       265,532             Total assets   $ 1,026,086     $ 1,040,875             LIABILITIES AND SHAREHOLDERS' EQUITY       CURRENT LIABILITIES:         Trade payables   $ 34,267     $ 46,448   Employees and payroll accruals     15,502       22,482   Deferred revenues and advances from customers   3,930       5,401   Operating lease liabilities     5,353       5,058   Other payables and accrued expenses     17,646       17,287   Total current liabilities     76,698       96,676             LONG-TERM LIABILITIES:         Accrued severance pay   $ 1,358     $ 1,543   Operating lease liabilities     25,430       21,900   Other long-term liabilities     1,519       1,203   Total long-term liabilities     28,307       24,646             SHAREHOLDERS' EQUITY     921,081       919,553             Total liabilities and shareholders' equity   $ 1,026,086     $ 1,040,875             KORNIT DIGITAL LTD. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. dollars in thousands, except share and per share data)           Three Months Ended.....»»

Category: earningsSource: benzingaMay 11th, 2022

3 Retail-Miscellaneous Stocks Braving Industry-Wide Challenges

While challenges prevail in the Retail - Miscellaneous industry, players such as Tractor Supply (TSCO), MarineMax (HZO) and Build-A-Bear Workshop (BBW) look well poised, courtesy of their business operating model and prospects ahead. Product cost inflation, tight labor market and supply-chain bottlenecks are some of the headwinds that players in the Zacks Retail – Miscellaneous industry have been encountering lately. These along with geopolitical turbulence, thanks to the conflict between Russia and Ukraine, have dampened consumers’ spirits.That said, industry participants have been focusing on superior product strategy, advancement of omni-channel capabilities and prudent capital investments to strike the right chord with consumers. Tractor Supply Company TSCO, MarineMax, Inc. HZO and Build-A-Bear Workshop, Inc. BBW look well poised, courtesy of their business operating model and opportunities ahead.About the IndustryThe Zacks Retail – Miscellaneous industry covers retailers of sporting goods, office supplies, and specialty products as well as sellers of a wide range of domestic merchandise. It also includes retailers of beauty products providing cosmetics, fragrances, skincare and haircare products, and salon styling tools. Some of the industry participants operate rural lifestyle retail stores, arts and crafts specialty outlets, and sell their products to farmers, ranchers, and others as well as tradesmen and small businesses. The industry also comprises recreational boat and yacht retailers as well as specialty value retailers offering a broad range of trend-right, high-quality merchandise targeted at the tween and teen customer. The players' profitability depends on a prudent pricing model, a well-organized supply chain, and an effective merchandising strategy.4 Key Industry TrendsPressure on Margins to Linger: Companies in the industry are vying for a bigger share on attributes such as price, products and speed to market. They have been accelerating investments to strengthen the digital ecosystem and boost shipping and delivery capabilities. While these endeavors drive sales, they entail high costs. Apart from these, any deleverage in SG&A rate, higher labor and occupancy costs, and increased marketing and other store-related expenses might build pressure on margins. Of late, the industry participants have been dealing with high labor costs amid the tight labor market, increased freight costs, container shortages, and supply delays. Nonetheless, companies have been focused on undertaking initiatives to mitigate cost-related challenges. These include streamlining operational structures, optimizing supply networks as well as adopting effective pricing policies.Consumer Confidence Eases on Soaring Inflation: Elevating prices and the war between Russia and Ukraine continue to pose a threat to consumer spending activity and confidence. Per Conference Board data, the Consumer Confidence Index nudged down to 107.3 in April from March’s upwardly revised reading of 107.6. Undoubtedly, the industry’s prospects are correlated with the purchasing power of consumers. But higher gasoline and food prices have been squeezing disposable income. The consumer price index rose 1.2% month on month in March, following an increase of 0.8% in February. On a year-over-year basis, the metric rose 8.5%, the fastest pace since December 1981.Focus on Boosting Portfolio & Market Reach: Most companies in the space are working on providing a wide assortment of products, enhancing the online experience and adopting a favorable pricing strategy to boost sales. Initiatives such as building omni-channel operations, coming up with reward programs, and developing innovative products and services are worth mentioning. There has been an increase in demand for office supplies, personal care items, domestic merchandise products and fitness-related products. Companies are looking to fuel sales via targeted marketing.Digitization Key to Growth: With the change in consumer shopping patterns and behavior, industry participants have been playing dual in-store and online roles. In this respect, the industry players have been directing resources toward digital platforms, accelerating fleet optimization and augmenting the supply chain. In fact, companies’ initiatives to expand delivery options — curbside pickup or ship-to-home orders — and contactless payment solutions have been a boon amid the pandemic. Additionally, retailers are investing in renovation, improved checkouts and mobile point-of-sale capabilities to keep stores relevant. Keeping in mind consumers’ product preferences and inclination toward online shopping, retailers are replenishing shelves with in-demand merchandise and ramping up investments in digitization.Zacks Industry Rank Indicates Bleak ProspectsThe Zacks Retail – Miscellaneous industry is housed within the broader Zacks Retail – Wholesale sector. The industry currently carries a Zacks Industry Rank #150, which places it in the bottom 41% of more than 250 Zacks industries.The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates drab near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of the negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are losing confidence in this group’s earnings growth potential. Since the beginning of December 2021, the industry’s earnings estimate has declined 6.4%.Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.Industry Vs. Broader MarketThe Zacks Retail – Miscellaneous industry has underperformed the broader Retail – Wholesale sector and the Zacks S&P 500 composite over the past year.The industry has fallen 31.1% over this period compared with the S&P 500’s decline of 1.6%. and the broader sector’s decline of 28.9% in the said time frame.One-Year Price PerformanceIndustry's Current ValuationOn the basis of forward 12-month price-to-earnings (P/E), which is commonly used for valuing retail stocks, the industry is currently trading at 13.04X compared with the S&P 500’s 17.87X and the sector’s 20.83X.Over the last five years, the industry has traded as high as 24.96X, as low as 11.28X and at the median of 16.33X, as the chart below shows.Price-to-Earnings Ratio (Past 5 Years)Pick These 3 Retail - Miscellaneous StocksMarineMax: Significant geographic reach, product diversification and stellar demand bode well for this world’s largest recreational boat and yacht retailer. MarineMax has been benefiting as consumers embrace and enjoy the boating lifestyle. The company’s digitization endeavors have been helping it better engage with customers. The company’s investments in high-margin businesses such as finance, insurance, brokerage, marina and service operations bode well. Impressively, its strategic acquisitions have been playing a major role in driving the top line. Recently, MarineMax invested in Boatzon, the first 100% online boat and marine retailer providing secure direct marketplace services.This Zacks Rank #1 (Strong Buy) company has a trailing four-quarter earnings surprise of 32.8%, on average. The Zacks Consensus Estimate for its current-fiscal earnings per share (EPS) has risen 4.8% in the past 30 days. Shares of MarineMax have declined 34.4% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here. Price and Consensus: HZOTractor Supply Company: This largest rural lifestyle retailer in the United States has been benefiting from its robust business strategies, "Life Out Here" and everyday low pricing, as well as favorable consumer demand for product categories. In addition, Tractor Supply's Neighbor's Club loyalty program remains sturdy. Its omni-channel initiatives, including curbside pickup and same-day delivery, have been aiding digital sales. We note that strength in everyday merchandise, including consumable, usable and edible products, has been fueling sales.Tractor Supply has a trailing four-quarter earnings surprise of 12.4%, on average. The company has an estimated long-term earnings growth rate of 9.8%. The Zacks Consensus Estimate for its current-fiscal EPS has risen 1.8% in the past 30 days. Shares of this Zacks Rank #2 (Buy) company have risen 3.5% in the past year.Price and Consensus: TSCOBuild-A-Bear Workshop: Enhanced marketing programs and omnichannel capabilities coupled with pent-up demand have been contributing to Build-A-Bear Workshop’s performance. The company’s focus on digital transformation, better engagement with consumers and extension of the addressable market by reaching beyond the core kid base to acquire new teen and adult customers should fortify its position in the industry. This multi-channel retailer of plush animals and related products envisions first-quarter fiscal 2022 total revenues to exceed the prior-year period figure.Impressively, Build-A-Bear Workshop has a trailing four-quarter earnings surprise of 214.3%, on average. The Zacks Consensus Estimate for its current-fiscal EPS has risen 1.6% in the past 60 days. We also note that shares of this Zacks Rank #2 company have zoomed 148.2% in the past year.Price and Consensus: BBW 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +25.4% per year. So be sure to give these hand-picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Tractor Supply Company (TSCO): Free Stock Analysis Report BuildABear Workshop, Inc. (BBW): Free Stock Analysis Report MarineMax, Inc. (HZO): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksMay 9th, 2022

LendingTree Optimistic After Hitting First Quarter Targets

Online loan marketplace LendingTree saw its stock jump after it defied headwinds to meet projections in its Q1 earnings report yesterday, even as the broader refinance and mortgage markets have been weighed down by inflation and rising interest rates. With consolidated revenue of $283.2 million, a $10.8 million net loss and a 33% year-over-year decrease… The post LendingTree Optimistic After Hitting First Quarter Targets appeared first on RISMedia. Online loan marketplace LendingTree saw its stock jump after it defied headwinds to meet projections in its Q1 earnings report yesterday, even as the broader refinance and mortgage markets have been weighed down by inflation and rising interest rates. With consolidated revenue of $283.2 million, a $10.8 million net loss and a 33% year-over-year decrease in its mortgage segment, LendingTree definitely was hit by the crunch in mortgage rates and home inventory, with CEO and chair Doug Lebda specifically citing a “dramatic decline” in mortgage refinancing. But historically high mortgage rates and a significant slowdown in mortgage applications over the past couple months did not hit the company as hard as some feared, as Lebda added the company had prepared for the current environment and focused on customers and conversions going into the year. “We made the conscious decision to focus intently on consumer quality at the beginning of the industry’s cyclical downturn last year, and we believe those efforts will continue to drive increased revenue and profitability for the business throughout 2022,” he said in a statement. LendingTree stock was up more than 5% in early trading following the report and earnings call. The “homes segment” of the company made up about one-third of its overall revenue this quarter, and other services, including personal loans and credit cards, rose significantly year-over-year. LendingTree still revised its full-year outlook, from projected revenue of $1.25 billion in 2022 down to $1.19 billion based at least partially on the tough mortgage environment. “We remain in a position of strength to invest in our business, creating the premier customer financial shopping experience, while much of our competition struggle with profitability,” said LendingTree CFO Trent Ziegler in a statement. “We are leaning into this strength, maintaining the investment in our strategic priorities and the strength of our brand despite numerous macro headwinds. However, the persistency of inflation and its impact on our insurance partners, along with a significant jump in mortgage rates has to be acknowledged and reflected in our forecast.” In a conference call, LendingTree executives also said they were monitoring ongoing layoffs in the mortgage industry along with other macroeconomic indicators, but that most of the data has fallen within the company’s expectations. With traffic to LendingTree’s platform still high, the company also was focusing on conversion rates, executives said. In a letter to shareholders that was released along with the earnings report, Ledba and Zielger sought to further clarify the complex path forward, promising to remain “disciplined around non-marketing operating expenses” and highlighting “exceptional growth” from personal loan, home equity and small business products. Home equity product revenue grew 112% year-over-year, according to the letter. The letter also hinted at a “completely re-imagined mortgage experience” still in the early stages of testing, which will “ LendingTree as a true consumer advocate” and will seek to improve other underlying fundamentals for the company including conversion rate and customer loyalty. “While the current macro headwinds have impacted our financial outlook for 2022, we are investing into this volatile period for the economy from a position of strength,” Ledba and Ziegler concluded. The post LendingTree Optimistic After Hitting First Quarter Targets appeared first on RISMedia......»»

Category: realestateSource: rismediaMay 6th, 2022

eXp Powers Up With Strong Q1 Earnings

Virtually-focused brokerage giant eXp, which has seen significant growth and attention over the course of the pandemic, started off 2022 strong with strong growth in both agents and revenue, bringing in $1 billion during the first quarter and seeing its agent count jump 55% year-over-year, according to its first earnings report of the year, released… The post eXp Powers Up With Strong Q1 Earnings appeared first on RISMedia. Virtually-focused brokerage giant eXp, which has seen significant growth and attention over the course of the pandemic, started off 2022 strong with strong growth in both agents and revenue, bringing in $1 billion during the first quarter and seeing its agent count jump 55% year-over-year, according to its first earnings report of the year, released Wednesday. “eXp’s strong momentum continued through the first quarter as even more agents joined what we believe is the most agent-centric brokerage on the planet, fueling the fastest-growing agent base in the history of real estate,” said Glenn Sanford, founder and CEO of eXp in a statement. “It is our goal to be over 100,000 agents and brokers worldwide by the end of the year.” The company recently surpassed 80,000 agents as many in the industry have flocked to the company’s unique virtual model during the last two years—though investors have not been as keen on the company recently as eXp’s stock has lost almost 70% in value over the last six months, after skyrocketing in early 2021. eXp stock spiked in early trading following the earnings report, opening nearly 10% higher at around $16 a share. In the report, the company also announced an increase in its stock buyback program, from $400 million to $500 million, as well as a $0.04 dividend per share on common stock. “[;The stock buyback [ reflects our leadership team’s confidence in our ability to deliver sustainable growth in our business over the long-term,” eXp CFO Jeff Whiteside said in a statement. Agent growth has been a hallmark of eXp’s rapid expansion, as well as its forays into international markets, with a presence in 20 countries this quarter and plans to enter New Zealand, Chile and United Arab Emirates in the future. The company has not highlighted the proportion of domestic to international agents. Q1 growth represented a 55% increase in total agents from a year ago. Number of transactions closed also rose 55% to 114,305 this quarter, while dollar volume rose 69% to $41.4 billion year-over-year. eXp closed the quarter with $116 million cash on hand, and a net income of $8.86 million, an increase of 83%. “eXp was built to thrive in challenging market conditions and despite the headwinds affecting the broader housing market, we are well-positioned to capture increased market share,” said Sanford. In an earnings call following the release, Sanford went further to say that eXp’s growth was particularly impressive considering the speed at which interest rates have risen this year, and adding so many agents defied a trend of the industry actually losing REALTORS®. “From our perspective we feel really good about the numbers, but again there are some macroeconomic factors that we’re starting to see actually play,” he said. Jesse Williams is RISMedia’s associate online editor. Email him your real estate news to jwilliams@rismedia.com. The post eXp Powers Up With Strong Q1 Earnings appeared first on RISMedia......»»

Category: realestateSource: rismediaMay 4th, 2022