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Deckers, Lumber Liquidators, Textron, Embraer and General Dynamics highlighted as Zacks Bull and Bear of the Day
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For Immediate Release
Chicago, IL – August 27, 2021 – Zacks Equity Research Shares of Deckers Outdoor Corporation (DECK - Free Report) as the Bull of the Day, Lumber Liquidators Holdings, Inc. (LL - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onTextron Inc. (TXT - Free Report) , Embraer S.A. (ERJ - Free Report) and General Dynamics Corporation (GD - Free Report) .
Decker Brands is one of the hottest retailers in the world. This Zacks Rank #1 (Strong Buy) is hitting on all cylinders as it raised full year guidance even with COVID-19 uncertainties still looming.
Deckers Brands designs, manufactures and distributes footwear, apparel and accessories. It's most prominent brand is UGG, but it also owns Koolaburra, HOKA ONE ONE, Teva and Sanuk.
It's products are sold around the world in department and specialty stores as well as company-owned and operated retail stores. Deckers also operates an online store at deckers.com.
A Huge Beat in the Fiscal 2022 Q1
On July 29, Deckers reported its fiscal 2022 first quarter results and blew by the Zacks Consensus Estimate reporting $1.71 versus a loss of $0.04.
It was the company's most profitable first quarter ever.
Revenue rebounded 78.2% from last year's pandemic hit Q1 to $504.7 million from $283.2 million.
Gross margin rose to 51.6% from 50.3% a year ago.
For the first time HOKA ONE ONE brought in higher sales than the flagship brand UGG. HOKA ONE ONE sales jumped 95.5% to $213.1 million from $109 million a year ago.
UGG rose 70.8% to $213 million from $124.7 million last year.
Teva sales jumped 65.9% to $58.5 million from $35.2 million last year. While Sanuk brand sales rose 13.7% to $15 million from $13.2 million in the year ago period.
In the other brands, which primarily included Koolaburra, sales rose 435.9% to $5 million from $0.9 million last year.
Wholesale net sales rose 140.2% to $344.3 million from $143.3 million last year when the stores were closed.
Direct-to-Consumer remained hot, with sales adding another 14.7% to $160.4 million from $139.8 million.
Deckers Raised Full Year Guidance
With a blow out quarter, Deckers felt bullish enough to raise full year guidance despite ongoing challenges with COVID-19, including with a tight supply chain and logistics at capacity.
In the first quarter, only 66% of the company's global stores were open the entire first quarter, which was up from about 20% in the prior year.
Deckers anticipated that store closures and operating limitations in certain locations may continue for at least a portion of the fiscal second quarter, and potentially beyond.
Yet, they still raised guidance.
Net sales are now expected in the range of $3.010 billion to $3.060 billion from $2.950 billion to $3.000 billion.
Earnings are now expected to be between $14.45 to $15.10 up from the prior guidance given in May of $14.05 to $14.65.
Analysts Raise Earnings Estimates
The analysts are even more bullish as 4 have raised their estimates in the last 30 days and it has pushed up the Zacks Consensus to $15.65, which is higher than the company's own guidance range.
That's earnings growth of 16.2%.
Analysts are bullish about fiscal 2023 as well.
3 estimates have been revised higher for the next fiscal year, pushing up the fiscal 2023 Zacks Consensus Estimate to $18.23 from $17.24.
That's another 16.5% earnings growth.
Deckers have been steadily growing its earnings, year-after-year, the last 5 years, even during the pandemic.
Shares Near 5-Year Highs
Deckers shares have soared off the coronavirus lows and continue to hit new highs in 2021.
They're up 47.5% year-to-date and now trade with a forward P/E of 27.6.
That's not cheap, but investors should expect to pay a premium for one of the top global retailers.
Deckers has been rewarding shareholders with a $750 million stock repurchase, which was announced in May 2021.
In the first quarter, it repurchased about 249,000 shares for a total of $82.2 million at an average price of $329.55.
As of June 30, 2021, the company had $728.5 million remaining under the stock repurchase reauthorization.
Lumber Liquidators is seeing strong demand as Americans continue to nest. But this Zacks Rank #5 (Strong Sell) is facing supply chain and logistics headwinds.
Lumber Liquidators, otherwise known as LL Flooring, operates 416 stores in North America that sell hard-surface flooring.
It offers more than 500 varieties of hard-surface floors including vinyl plank, solid and engineered hardwood, laminate, bamboo, porcelain tile and cork.
Big Beat in the Second Quarter
On Aug 4, LL Flooring reported its second quarter results and beat the Zacks Consensus by $0.10. Earnings were $0.41 versus the consensus of $0.31.
Net sales rose 30.9% over the prior year to $301.4 million and were also up 4.4% compared to the second quarter of 2019, which was pre-pandemic.
It was driven primarily by strong pro customer and services sales.
Comparable store sales rose 31.3% versus the same period last year, and were up 10% on a 2-year stack basis.
Adjusted gross margins decreased 90 basis points to 37.4% year-over-year due to higher tariffs, materials and inbound transportation costs that were partially offset by pricing, promotion and sourcing strategies.
Still Facing Challenges Ahead
Despite the solid quarter, LL Flooring warned that the future could still be rocky.
"In the near term, we are cautious about the potential impact of continued supply chain disruptions as well as related higher transportation and materials costs," said Charles Tyson.
"To minimize the impact of these headwinds, we are keenly focused on rebuilding inventory to drive sales, executing our pricing and promotion strategies to optimize gross margin, and maintaining disciplined expense management as we continue to invest in our growth strategies," he said.
Earnings Estimates Cut
The analysts also turned cautious as one estimate was cut for both 2021 and 2022 in the last 30 days.
The Zacks Consensus Estimate for 2021 has fallen to $1.24 from $1.36 in the last month. That's an earnings decline of 45.6% as LL Flooring made $2.28 last year.
The 2022's Zacks Consensus also fell to $1.20 from $1.41 in the last month.
That's another earnings decline of 3.6%.
Shares Sink in 2021
After rallying big in 2020, shares have sunk in 2021, falling 34%.
Still, they aren't dirt cheap either. They still trade with a forward P/E of 16.6.
However, LL Flooring has a PEG ratio of just 0.55, which indicates both value and growth.
Additional content:
3 Defense Stocks to Buy on U.S. Pullout from Afghanistan
The socio-political stability in the entire Middle East has been disrupted following the turbulence caused by Taliban's takeover of Kabul, the capital city of Afghanistan, last week. Although the sudden news of Taliban's hostile invasion initially sent shockwaves across the U.S. stock market, not all sectors have a reason to worry.
Indeed, an act of war or the mere possibility of combat boosts demand for weapons manufacturers and varied defense products. Since the United States has been a long-time patronizer of the erstwhile Afghan government, the current hostile scenario in the country has brought prominent U.S. defense contractors in the spotlight.
U.S.-Afghan Military Ties
The U.S. military set its foot firmly in Afghanistan shortly after the 9/11 attacks in 2001. Since then, the United States has been rendering military support to Afghanistan in combat operations against Taliban militants. As reported by the U.S. Department of State in January 2021, there have been more than 2,400 U.S. military deaths in Afghanistan since 2001, and over 20,000 U.S. service members have been wounded in action.
The United States is part of a coalition of more than 100 countries and organizations that provide both security and civilian assistance to Afghanistan. The international community made almost $5 billion available for the Afghan National Defense and Security Forces (ANDSF) in 2019, with the United States providing the greatest share. This clearly shows the immense involvement of America in maintaining Afghanistan's military stability.
The Current Scenario
As far as the fresh turmoil in Kabul is concerned, the U.S. military is planning to leave Afghanistan entirely by Aug 31, as per the peace agreement signed between former president Donald Trump and Taliban leaders. The peace agreement was later backed by U.S President Biden. So far, U.S. soldiers deployed in Kabul have been working tirelessly to not only evacuate people but also some important military equipment from the country.
Stocks to Buy
With U.S. troops set to leave Afghanistan, President Biden is facing some criticism for this withdrawal. Only time will tell if this leads to a reversal of the decision. On the other hand, in the absence of U.S. troops and their support, Afghanistan will totally collapse under Taliban and there may be warfare in the country. So, U.S. forces might again consider engaging in a war against Taliban.
In this scenario, investors should consider adding the following U.S. defense stocks to their portfolios. These companies have already established ties with ANDSF and thus will be in a position to gain if there is further unrest in the nation.
Textron's COMMANDO vehicles have been supporting the Afghan National Army Special Operations Command (ANASOC) for quite a few years. Since 2012, Textron has delivered more than 600 vehicles to support the ANASOC, all of which were actively engaged in security operations around the country, as of 2019. The company currently sports a Zacks Rank #1 (Strong Buy) and boasts a long-term earnings growth rate of 28.3%.
Embraer's A-29 Super Tucano aircraft serves the Afghanistan army. In 2020, the United States delivered four A-29 Super Tucano aircraft to the Afghan Air Force as part of the Nato-led Resolute Support Mission. The company currently carries a Zacks Rank #2 (Buy) and has a long-term earnings growth rate of 17%. You can see the complete list of today's Zacks #1 Rank stocks here.
General Dynamics provides information technology (IT) management services in Afghanistan to support U.S. Army Corps of Engineers (USACE) Middle East District reconstruction and infrastructure-development programs. The company has also supplied various quantities of different rockets, warheads, motors and associated components in the past, to boost the capabilities of ANDSF. The company currently carries a Zacks Rank #2 and has a long-term earnings growth rate of 8.6%.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Deckers, Lumber Liquidators, Textron, Embraer and General Dynamics highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – August 27, 2021 – Zacks Equity Research Shares of Deckers Outdoor Corporation (DECK - Free Report) as the Bull of the Day, Lumber Liquidators Holdings, Inc. (LL - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onTextron Inc. (TXT - Free Report) , Embraer S.A. (ERJ - Free Report) and General Dynamics Corporation (GD - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Decker Brands is one of the hottest retailers in the world. This Zacks Rank #1 (Strong Buy) is hitting on all cylinders as it raised full year guidance even with COVID-19 uncertainties still looming.
Deckers Brands designs, manufactures and distributes footwear, apparel and accessories. It's most prominent brand is UGG, but it also owns Koolaburra, HOKA ONE ONE, Teva and Sanuk.
It's products are sold around the world in department and specialty stores as well as company-owned and operated retail stores. Deckers also operates an online store at deckers.com.
A Huge Beat in the Fiscal 2022 Q1
On July 29, Deckers reported its fiscal 2022 first quarter results and blew by the Zacks Consensus Estimate reporting $1.71 versus a loss of $0.04.
It was the company's most profitable first quarter ever.
Revenue rebounded 78.2% from last year's pandemic hit Q1 to $504.7 million from $283.2 million.
Gross margin rose to 51.6% from 50.3% a year ago.
For the first time HOKA ONE ONE brought in higher sales than the flagship brand UGG. HOKA ONE ONE sales jumped 95.5% to $213.1 million from $109 million a year ago.
UGG rose 70.8% to $213 million from $124.7 million last year.
Teva sales jumped 65.9% to $58.5 million from $35.2 million last year. While Sanuk brand sales rose 13.7% to $15 million from $13.2 million in the year ago period.
In the other brands, which primarily included Koolaburra, sales rose 435.9% to $5 million from $0.9 million last year.
Wholesale net sales rose 140.2% to $344.3 million from $143.3 million last year when the stores were closed.
Direct-to-Consumer remained hot, with sales adding another 14.7% to $160.4 million from $139.8 million.
Deckers Raised Full Year Guidance
With a blow out quarter, Deckers felt bullish enough to raise full year guidance despite ongoing challenges with COVID-19, including with a tight supply chain and logistics at capacity.
In the first quarter, only 66% of the company's global stores were open the entire first quarter, which was up from about 20% in the prior year.
Deckers anticipated that store closures and operating limitations in certain locations may continue for at least a portion of the fiscal second quarter, and potentially beyond.
Yet, they still raised guidance.
Net sales are now expected in the range of $3.010 billion to $3.060 billion from $2.950 billion to $3.000 billion.
Earnings are now expected to be between $14.45 to $15.10 up from the prior guidance given in May of $14.05 to $14.65.
Analysts Raise Earnings Estimates
The analysts are even more bullish as 4 have raised their estimates in the last 30 days and it has pushed up the Zacks Consensus to $15.65, which is higher than the company's own guidance range.
That's earnings growth of 16.2%.
Analysts are bullish about fiscal 2023 as well.
3 estimates have been revised higher for the next fiscal year, pushing up the fiscal 2023 Zacks Consensus Estimate to $18.23 from $17.24.
That's another 16.5% earnings growth.
Deckers have been steadily growing its earnings, year-after-year, the last 5 years, even during the pandemic.
Shares Near 5-Year Highs
Deckers shares have soared off the coronavirus lows and continue to hit new highs in 2021.
They're up 47.5% year-to-date and now trade with a forward P/E of 27.6.
That's not cheap, but investors should expect to pay a premium for one of the top global retailers.
Deckers has been rewarding shareholders with a $750 million stock repurchase, which was announced in May 2021.
In the first quarter, it repurchased about 249,000 shares for a total of $82.2 million at an average price of $329.55.
As of June 30, 2021, the company had $728.5 million remaining under the stock repurchase reauthorization.
Bear of the Day:
Lumber Liquidators is seeing strong demand as Americans continue to nest. But this Zacks Rank #5 (Strong Sell) is facing supply chain and logistics headwinds.
Lumber Liquidators, otherwise known as LL Flooring, operates 416 stores in North America that sell hard-surface flooring.
It offers more than 500 varieties of hard-surface floors including vinyl plank, solid and engineered hardwood, laminate, bamboo, porcelain tile and cork.
Big Beat in the Second Quarter
On Aug 4, LL Flooring reported its second quarter results and beat the Zacks Consensus by $0.10. Earnings were $0.41 versus the consensus of $0.31.
Net sales rose 30.9% over the prior year to $301.4 million and were also up 4.4% compared to the second quarter of 2019, which was pre-pandemic.
It was driven primarily by strong pro customer and services sales.
Comparable store sales rose 31.3% versus the same period last year, and were up 10% on a 2-year stack basis.
Adjusted gross margins decreased 90 basis points to 37.4% year-over-year due to higher tariffs, materials and inbound transportation costs that were partially offset by pricing, promotion and sourcing strategies.
Still Facing Challenges Ahead
Despite the solid quarter, LL Flooring warned that the future could still be rocky.
"In the near term, we are cautious about the potential impact of continued supply chain disruptions as well as related higher transportation and materials costs," said Charles Tyson.
"To minimize the impact of these headwinds, we are keenly focused on rebuilding inventory to drive sales, executing our pricing and promotion strategies to optimize gross margin, and maintaining disciplined expense management as we continue to invest in our growth strategies," he said.
Earnings Estimates Cut
The analysts also turned cautious as one estimate was cut for both 2021 and 2022 in the last 30 days.
The Zacks Consensus Estimate for 2021 has fallen to $1.24 from $1.36 in the last month. That's an earnings decline of 45.6% as LL Flooring made $2.28 last year.
The 2022's Zacks Consensus also fell to $1.20 from $1.41 in the last month.
That's another earnings decline of 3.6%.
Shares Sink in 2021
After rallying big in 2020, shares have sunk in 2021, falling 34%.
Still, they aren't dirt cheap either. They still trade with a forward P/E of 16.6.
However, LL Flooring has a PEG ratio of just 0.55, which indicates both value and growth.
Additional content:
3 Defense Stocks to Buy on U.S. Pullout from Afghanistan
The socio-political stability in the entire Middle East has been disrupted following the turbulence caused by Taliban's takeover of Kabul, the capital city of Afghanistan, last week. Although the sudden news of Taliban's hostile invasion initially sent shockwaves across the U.S. stock market, not all sectors have a reason to worry.
Indeed, an act of war or the mere possibility of combat boosts demand for weapons manufacturers and varied defense products. Since the United States has been a long-time patronizer of the erstwhile Afghan government, the current hostile scenario in the country has brought prominent U.S. defense contractors in the spotlight.
U.S.-Afghan Military Ties
The U.S. military set its foot firmly in Afghanistan shortly after the 9/11 attacks in 2001. Since then, the United States has been rendering military support to Afghanistan in combat operations against Taliban militants. As reported by the U.S. Department of State in January 2021, there have been more than 2,400 U.S. military deaths in Afghanistan since 2001, and over 20,000 U.S. service members have been wounded in action.
The United States is part of a coalition of more than 100 countries and organizations that provide both security and civilian assistance to Afghanistan. The international community made almost $5 billion available for the Afghan National Defense and Security Forces (ANDSF) in 2019, with the United States providing the greatest share. This clearly shows the immense involvement of America in maintaining Afghanistan's military stability.
The Current Scenario
As far as the fresh turmoil in Kabul is concerned, the U.S. military is planning to leave Afghanistan entirely by Aug 31, as per the peace agreement signed between former president Donald Trump and Taliban leaders. The peace agreement was later backed by U.S President Biden. So far, U.S. soldiers deployed in Kabul have been working tirelessly to not only evacuate people but also some important military equipment from the country.
Stocks to Buy
With U.S. troops set to leave Afghanistan, President Biden is facing some criticism for this withdrawal. Only time will tell if this leads to a reversal of the decision. On the other hand, in the absence of U.S. troops and their support, Afghanistan will totally collapse under Taliban and there may be warfare in the country. So, U.S. forces might again consider engaging in a war against Taliban.
In this scenario, investors should consider adding the following U.S. defense stocks to their portfolios. These companies have already established ties with ANDSF and thus will be in a position to gain if there is further unrest in the nation.
Textron's COMMANDO vehicles have been supporting the Afghan National Army Special Operations Command (ANASOC) for quite a few years. Since 2012, Textron has delivered more than 600 vehicles to support the ANASOC, all of which were actively engaged in security operations around the country, as of 2019. The company currently sports a Zacks Rank #1 (Strong Buy) and boasts a long-term earnings growth rate of 28.3%.
Embraer's A-29 Super Tucano aircraft serves the Afghanistan army. In 2020, the United States delivered four A-29 Super Tucano aircraft to the Afghan Air Force as part of the Nato-led Resolute Support Mission. The company currently carries a Zacks Rank #2 (Buy) and has a long-term earnings growth rate of 17%. You can see the complete list of today's Zacks #1 Rank stocks here.
General Dynamics provides information technology (IT) management services in Afghanistan to support U.S. Army Corps of Engineers (USACE) Middle East District reconstruction and infrastructure-development programs. The company has also supplied various quantities of different rockets, warheads, motors and associated components in the past, to boost the capabilities of ANDSF. The company currently carries a Zacks Rank #2 and has a long-term earnings growth rate of 8.6%.
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Zacks Investment Research
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.