For Immediate Release
Chicago, IL – November 29, 2021 – Zacks Equity Research Shares of Boot Barn Holdings, Inc. (
BOOT Quick Quote BOOT - Free Report) as the Bull of the Day, Lear Corporation ( LEA Quick Quote LEA - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Schnitzer Steel Industries, Inc. ( SCHN Quick Quote SCHN - Free Report) , Nucor Corporation ( NUE Quick Quote NUE - Free Report) and TimkenSteel Corporation ( TMST Quick Quote TMST - Free Report) . Here is a synopsis of all five stocks: Boot Barn is one of the top retailers in America. This Zacks Rank #1 (Strong Buy) is expected to grow sales 54.4% this year.
Boot Barn is a lifestyle retailer of western and work-related footwear, apparel and accessories for men, women and children. It operates 281 stores in 36 states, in addition to its e-commerce sites which includes bootbarn.com, sheplers.com and countryoutfitter.com.
Another Big Beat in Fiscal Q2
On Oct 27, Boot Barn reported its fiscal 2022 second quarter results and beat the Zacks Consensus by $0.28. Earnings were $1.22 versus the consensus of $0.94.
This was Boot Barn's 6th consecutive earnings beat in a row.
Boot Barn has grown its online business during the pandemic, but in the quarter, customers came back to the stores in droves.
It was a phenomenal quarter versus last year but also versus the fiscal 2020 pre-pandemic second quarter.
Retail store sales were up 76% versus 2020 and 69% versus 2019. E-commerce sales jumped 40% versus 2020 and were up 57% versus 2019.
Total sales gained 69% year-over-year but were also up 67% versus 2 years ago.
With costs rising, Boot Barn was still able to grow its merchandise margins by 360 basis points primarily due to better full-price selling (aka low promotions) and growth in exclusive brands.
Q3 Preliminary Sales and Holiday Outlook
On Oct 27, Boot Barn gave preliminary 4-week sales numbers for the third quarter.
Its retail sales were up 67% and e-commerce gained 69% versus the pre-pandemic 2019 quarter.
Boot Barn also said it was "optimistic" about the upcoming holiday season.
Analysts Remain Bullish
It was another great quarter and it's not surprising that the analysts remained bullish on Boot Barn for the rest of fiscal 2022.
4 estimates were raised for the full year in the last 30 days, pushing up the Zacks Consensus Estimate to $5.44 from $4.40.
That's earnings growth of 183% as the company made $1.92 last year.
Shares Have Soared in 2021
Boot Barn has been one of the hottest retail stocks this year, and the last 5 years.
Shares are up 182% year-to-date but have seen some weakness over the week of Thanksgiving on the COVID variant scare.
Shares aren't "cheap" with a forward P/E of 23.5.
But it's expected to grow sales 54% this year. You're buying the growth story.
But investors looking for a more attractive entry point into one of the top retailers in the country, should keep Boot Barn on their short list during any pullback.
Lear Corp. is getting hit by the semiconductor shortage. This Zacks Rank #5 (Strong Sell) saw revenue fall 13% in the third quarter.
Lear is a leading provider of Seating and E-Systems for the automotive industry. Headquartered in Michigan, it has employees in 38 countries.
An Earnings Miss in the Third Quarter
Lear reported third quarter results on Nov 2 and missed on the Zacks Consensus Estimate by $0.03. Earnings were $0.53 versus the Zacks Consensus of $0.56.
While it saw sales growth over the market of 9 percentage points, sales did decrease to $4.3 billion from $4.9 billion a year ago due to global vehicle production declines related to the semiconductor shortage.
Without those semiconductors, they can't deliver the cars.
In the quarter, Lear entered into an agreement to acquire Kongsberg Automotive's Interior Comfort Division, a leader in massage and lumbar for automotive seating applications.
Lowered Full Year Guidance
Due to lower auto production, Lear lowered its full year sales guidance to a range of $18.8 billion to $19.2 billion from its prior guidance given in the second quarter of $19.7 billion to $20.5 billion.
5 analysts cut their full year earnings estimates for both 2021 and 2022. One analyst even lowered their 2021 estimate in the last week.
The 2021 Zacks Consensus Estimate fell to $7.83 from $11.55 just 90 days ago.
That's still earnings growth of 46.9% as the company made just $5.33 last year, as the pandemic hit.
2022 is expected to look brighter still, even though analysts have gotten less bullish on it in the past month.
The 2022 Zacks Consensus has fallen to $15.21 from $18.12 in the prior 90 days, but that's still up 94% from this year.
Raised its Dividend Again
On Nov 18, Lear announced it was raising its quarterly dividend to $0.77 from $0.50. It's payable on Dec 29 to shareholders of record as of the close of business on Dec 10, 2021.
That increase returned the dividend to its pre-pandemic levels.
It's currently yielding 1.7%.
A Buying Opportunity?
While shares of Lear are off their 2020 coronavirus lows, they have been weak over the last 6 months thanks to the semiconductor shortage.
Shares have fallen 7.9% during that time.
With the earnings estimates being cut, the shares aren't cheap on a forward P/E basis. They're trading at 22.9x.
But investors interested in the auto parts plays, might want to keep Lear on their watch list for changes to a more favorable Zacks Rank and because the shares will get even cheaper on further weakness.
Additional content: U.S. Steel Imports Slump in October as Prices Cool Off
U.S. steel imports dropped in October on a monthly comparison basis, but are up year over year for the first ten months of the year — according to the latest American Iron and Steel Institute ("AISI") report.
Total Steel Imports Decline 17% in October
The association of North American steel makers noted yesterday that total domestic steel imports fell 16.7% from the previous month in October to roughly 2.71 million net tons. Finished steel imports also declined 6% to around 2.32 million net tons for the reported month.
Biggest volumes of finished steel imports from offshore for October were South Korea with 203,000 net tons (down 32% from September), Turkey with 149,000 net tons (up 26%), Vietnam with 110,000 net tons (up 41%), Germany with 83,000 net tons (down 6%), and Japan with 80,000 net tons (down 3%), per AISI.
Meanwhile, total and finished domestic steel imports went up 38.5% and 39.6% year over year, respectively, year to date through the first ten months of 2021. The AISI noted that these figures are based on preliminary Census Bureau data.
According to AISI, finished steel import market share was estimated at 24% in October, down from 25% in September. For the first ten months of 2021, finished steel import market share was estimated at 21%.
For 2021, annualized total and finished steel imports are expected to be 31.8 million net tons (up 44.6% year over year) and 22.8 million net tons (up 41.4%), respectively, AISI noted.
Industry Fundamentals Remain Favorable, But Prices Losing Steam
The American steel industry reaped the benefits of record-high steel prices this year, courtesy of an upsurge in demand in major end-use markets and tight supply conditions partly due to production disruptions at domestic steel mills and sizable Section 232 tariffs on steel imports.
The pandemic led to a sharp decline in demand for steel across major markets such as construction and automotive during the first half of 2020. The virus-led demand shocks also forced U.S. steel mills to curtail production with capacity utilization dropping to multi-year lows. However, demand for steel picked up as major steel-consuming sectors regained their footing following the easing of the coronavirus-induced restrictions.
An upturn in end-market demand has also helped U.S. steel industry capacity utilization rate to break above the important 80% level after plunging to 51.1% in May 2020 — the lowest level in many years. U.S. capacity utilization rate currently remains close to the 85% level amid strong domestic demand. According to AISI, capacity utilization rate clocked 84.3% for the week ending Nov 20.
Strong demand and persistent supply shortages have also led to a spike in U.S. steel prices this year to historically high levels, allowing U.S. steel companies to churn out record profits despite an uptick in costs of raw materials including ferrous scrap and headwinds from supply-chain and logistics issues.
After plummeting to a pandemic-led low of roughly $440 per short ton in August 2020, the benchmark hot-rolled coil (“HRC”) prices witnessed a significant rally, breaking above the $1,900 per short ton level on the back of a mismatch between supply and demand. The upswing in U.S. steel prices also created an unprecedented price arbitrage between U.S. and international prices, thereby attracting imports of lower-priced foreign steel. The strong price arbitrage triggered more steel shipments to U.S. shores this year despite the hefty tariffs.
However, HRC prices have come under pressure since last month after peaking in September 2021, pulled down by a downturn in demand in automotive resulting from production cuts by carmakers in the wake of the semiconductor shortage. However, prices remain elevated notwithstanding the recent declines, currently hovering near $1,800 per short ton.
Despite a slowdown in steel demand in the automotive space amid the ongoing chip crunch, healthy demand in other end markets including construction and supply disruptions due to mill outages and scheduled maintenance are likely to lend support to HRC prices through the balance of 2021, driving profit margins of U.S. steel companies in the fourth quarter.
Steel Stocks Worth Considering
A few stocks currently worth a look in the steel space are
Schnitzer Steel Industries, Nucor and TimkenSteel.
Schnitzer Steel sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for SCHN’s current-year earnings has been revised 12.8% upward over the last 60 days. You can see
. the complete list of today’s Zacks #1 Rank stocks here
Schnitzer Steel beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 25.6%, on average. SCHN shares have surged around 106% over the past year.
Nucor, carrying a Zacks Rank #2 (Buy), has a projected earnings growth rate of 583.5% for the current year. NUE's consensus estimate for the current year has been revised 7.7% upward over the last 60 days.
Nucor has a trailing four-quarter earnings surprise of roughly 2.7%, on average. NUE has rallied around 111% in a year.
TimkenSteel carries a Zacks Rank #2 and has a projected earnings growth rate of 425.8% for the current year. The Zacks Consensus Estimate for TMST’s current-year earnings has been revised 22.7% upward over the last 60 days.
TimkenSteel beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 59.2%. TMST shares have surged around 213% in a year.
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