For Immediate Release
Chicago, IL – December 21, 2018 – Zacks Equity Research Boot Barn Holdings, Inc. (BOOT - Free Report) as the Bull of the Day, Mohawk Industries, Inc. (MHK) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Facebook (FB - Free Report) , Disney’s (DIS - Free Report) and 21st Century Fox (FOXA - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Boot Barn Holdings, Inc. stock is down roughly 1% over the last year after it suffered a massive three-month downturn despite a positive fiscal second quarter. With that said, the western and work-related boot and clothing retailer’s current growth projections appear impressive and analysts have become much more positive about Boot Barn’s future earnings recently.
Boot Barn was founded in 1978. Today, the company is one of the largest and fastest-growing lifestyle retail chains focused on western and work-related footwear, apparel, and accessories in the U.S. Investors can think of Boot Barn as a cowboy boot powerhouse that boasts 208 stores across 29 states.
Last quarter, Boot Barn saw its revenues surged 17.5% to reach $168.1 million. Maybe more importantly, the company’s same-store sales jumped 11.3%. On top of growth in this vital retail metric, Boot Barn expanded its store count by three.
As we briefly touched on at the top, shares of BOOT have tumbled 44% since the company reported its fiscal Q2 2019 earnings results on October 25. We should mention that its industry has fallen 11% during this same stretch and the S&P 500 is down 7%. Still, Boot Barn’s selloff pushed its stock price down 1% on the year.
BOOT stock currently sits at roughly $16 a share. This marks a 50% downturn from its 52-week high of $31.61 per share and marks what could be a solid buying opportunity for those high on Boot Barn.
Boot Barn’s recent downturn has helped its valuation picture appear much more attractive. BOOT is currently trading near its 12-month low at 12.2X forward 12-month Zacks Consensus EPS estimates, which marks a discount compared to its industry’s 22.1X average and the S&P’s 15.1X.
Better yet, Boot Barn has traded as high as 26.3X over the last year, with a one-year median of 20.8X. The chart below also helps us see that BOOT’s valuation is hardly stretched at the moment, and actually looks somewhat attractive—especially considering its growth prospects.
Moving on, Boot Barn’s current quarter revenues are projected to surge 12% to hit $251.62 million, based on our current Zacks Consensus Estimate. Meanwhile, the retailer’s current full-year revenues are projected to pop 13.5% to reach $769.2 million.
Looking ahead to the following fiscal year, Boot Barn’s full-year revenues are projected to climb 12.3% above our current year estimate.
Boot Barn’s bottom-line projections appear even stronger. The firm’s adjusted quarterly earnings are expected to climb 32.6% from the year-ago quarter to hit $0.61 per share.
More importantly and impressively, its full-year earnings are projected to skyrocket 78.6% to touch $1.25 a share. Our estimates also call for Boot Barn’s fiscal 2020 EPS figure to expand 15.5% above our current year projection.
Investors should also note that the company’s longer-term earnings revisions have trended unanimously in the right direction recently. This means that at least some analysts are more positive about the company’s future earnings than they were in the recent past.
Bear of the Day:
Mohawk Industries, Inc. stock has fallen nearly 60% during the past year, which coincided with its industry’s 50% downturn. Looking ahead, the flooring powerhouse’s earnings appear to be headed down, with analyst sentiment also trending in the wrong direction.
Mohawk is one of the world’s biggest flooring companies, with operations from the U.S. to India. The company’s offerings include rugs, carpets, ceramic tile, laminate, wood, stone, and vinyl flooring. Mohawk’s brands include Daltile, Durkan, Feltex, Godfrey Hirst, along with its namesake brands, and many more.
As we mentioned at the start, Mohawk stock has tanked roughly 60% during the last 12 months, which is even worse than its industry’s 50% average downturn. This is also far worse than the S&P 500’s 6.4% decline.
MHK stock closed regular trading Thursday down 1.26% at $115.50 per share, which marked a 59% downturn from its 52-week high of $282.21 a share. We can, however, see that Mohawk stock had been on an impressive run over the last decade until its recent selloff.
Moving on, we should note that Mohawk’s valuation picture appears relatively solid at the moment. MHK is currently trading at 10X forward 12-month Zacks Consensus EPS estimates. This marks a discount compared to the S&P’s 15.1X average, but comes in slightly above its industry’s 7.8X.
Plus, Mohawk has traded as high as 20.4X over the last year, with a one-year median of 13.2X. Therefore, we can say with some confidence that MHK stock is hardly stretched at the moment. Yet, a solid forward P/E doesn’t mean as much if it’s not accompanied by solid growth.
With that said, our current Zacks Consensus Estimate calls for Mohawk’s Q4 revenues to pop 3.48% to reach $2.45 billion. This would mark a slight downturn from Q3’s 4% climb. Meanwhile, the company’s fiscal 2018 revenues are projected to jump by 5.1% to reach $9.98 billion.
Peeking ahead to fiscal 2019, Mohawk’s top line is projected to climb 4.3% above our current year estimate. Clearly, these are not dismal revenue growth estimates. But the company’s earnings outlook is a very different story.
Turning to the bottom end of the income statement, the flooring giant’s adjusted Q4 earnings are expected to tumble 26.3% to $2.52 a share. On top of that, MHK’s current full-year earnings are projected to sink 9.5%. And a 2019 bottom-line bounce back doesn’t appear to be in the cards at the moment, with Mohawk’s adjusted full-year earnings projected to slip nearly 5% below our 2018 projection.
Worse still, Mohawk has received a ton of negative earnings estimate revisions recently, as the chart below shows us. This means that at least some analyst are more pessimistic about MHK’s earnings picture than they used to be.
Top 5 Financial News Stories of 2018
2018 has been a wild ride for investors, and that ride included a handful of major stories that significantly influenced our sentiment and understanding of the financial markets.
Notably, February’s correction caused a historic spike in the CBOE Volatility Index, also known as the VIX. This surge essentially broke the inverse VIX instruments that drove the “short volatility” trade, which had become a huge business on Wall Street during multi-year stretches of calmness. One popular inverse VIX ETN actually went to $0, and some traders lost millions of dollars overnight.
The broader market eventually recovered from the February selloff, but drama at certain market-leading companies —such as Facebook— kept the threat of more selling present at all times.
Facebook’s woes started in March, when it was first reported that political data firm Cambridge Analytica had inappropriately accessed information about millions of Facebook users. Questions about Facebook’s handling of user data continued to crop up throughout the year, with concerning new reports emerging as recently as this week.
Meanwhile, another segment of the tech sector was in flux this year, as Disney’s plans to buy 21st Century Fox assets culminated with the reveal of its upcoming over-the-top streaming service. Streaming media was more disruptive and impactful than ever before in 2018, and investors will likely feel its effects again in the New Year.
And while these headlines played out, two massive macroeconomic stories developed over several months: U.S. trade antagonism and the Federal Reserve’s shifting monetary policy.
The White House went to bat against basically any trade partner it could find, including Mexico, Canada, Europe, and China. The results so far have been mixed. These partners have certainly felt some pain, and a few key domestic industries have been hurt by rising input costs. A few updates to old policy were shaped into a “new Nafta,” and there are plans to hash out an agreement with China soon. A complete and long-term solution to these trade disputes continues to look uncertain, however.
This has added to the growing list of economic questions for the Fed to consider. Nevertheless, as we learned just yesterday, the central bank remains on course to tighten monetary policy and raise rates again—albeit with less rate hikes planned for next year than previously thought.
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