For Immediate Release
Chicago, IL – February 11 2018 – Zacks Equity Research Boot Barn (BOOT - Free Report) as the Bull of the Day, Casella Waste Systems (CWST - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Under Armour (UAA - Free Report) and Amazon (AMZN - Free Report) .
Here is a synopsis of all four stocks:
Bull of the Day:
Boot Barnis a $700 million operator of a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. The company's products include boots, denim, western shirts, cowboy hats, belts and belt buckles, and western-style jewelry and accessories.
They also stock a line-up of rugged footwear, outerwear, overalls, denims, and shirts, as well as safety-toe boots, and flame-resistant and high-visibility clothing. BOOT sells its products through 234 stores in 31 states and their website Bootbarn.com.
On December 21, my colleague Ben Rains wrote about BOOT as a Zacks #1 Rank because analysts were busy raising growth estimates. He was scratching his head about the 44% slide in shares since their October 25 fiscal Q2 report and finding no reasons not to buy the stock...
"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."
Holiday Quarter Kicks Boots!
If we had listened to Ben, we would have been buying BOOT at $16 right before Christmas. Because on Feb 5 they delivered the goods once again. From the company press release...
Highlights for the quarter ended December 29, 2018, were as follows:
· Net sales increased 13.0% to $254.0 million.
· Same store sales increased 9.2%, with double-digit growth in e-commerce and high single-digit growth in retail stores.
· Net income was $19.0 million, or $0.66 per diluted share, compared to net income of $20.1 million, or $0.73 per diluted share in the prior-year period.
· The Company opened two new stores during the quarter.
We didn't get earnings beats on the top or bottom lines, but the company raised full-year EPS guidance and analysts liked the growth trajectory and outlook so much -- especially those 9% SSS "comps" and the double-digit e-commerce growth -- that they in turn raised estimates for this fiscal year (ends March) and next year.
Boot Barn results gained from robust performances in all products, especially in work apparel, work boots, ladies and men's western apparel. Apart from this, solid marketing strategies, robust merchandising initiatives and strong store operations also contributed to the quarterly results.
Management raised its fiscal 2019 earnings guidance in the range of $1.31-$1.33, up from the prior view of $1.16-$1.24, representing an astounding 90% advance this year. This prompted analysts to raise FY2020 EPS from $1.47 to $1.51, representing 13.6% growth.
To visualize the growth trajectory, here's the Zacks proprietary Price & Consensus chart which plots changes in annual EPS estimates (from investment bank analysts) against the stock price, with green arrows representing the magnitude of earnings beats...
In addition to opening two new stores last quarter, company plans during the current fiscal year to open 18 new stores are more than halfway there with 11 openings in the nine months ending Dec 29, 2018.
In all, BOOT offers growth and value with a forward P/E under 17X and a price-to-sales ratio under 1.0 as 2019 will see revenues eclipse $800 million.
Bear of the Day:
Casella Waste Systemsis a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day. I still like this name as I held it in Home Run Investor, a newsletter service that looks for small and mid-cap growth stocks. I recall this name being in the portfolio a few times and may have even started out in Stocks Under $10, another service that I manage here at Zacks.
The stock still sports the growth and value divergence that I love to see. CWST has an A for Growth and a D for Value, and that tells me right away that I am on the right path. Growth investors and value investors are looking for different things so when I see a big difference between the style scores I know that I am looking at the right thing.
CWST has a chance to change the story with earnings coming out on 2/21 after the close.
I see that over the last four quarters there were two misses, a meet and a beat. That isn't the best I have ever seen but it isn't the worst either.
I see estimates falling and that is what you would expect from a Zacks Rank #5 (Strong Sell) stock. The current quarter has seen the Zacks Consensus Estimate move from $0.15 to $0.11 over the last 90 days.
I see the 2018 full year number move to $0.62 from $0.68. That is just a few cents, but the direction is the real issue.
The 2019 numbers have come in just a little, from $0.90 to $0.85... but that could all change with a strong report later this month.
Should You Buy Under Armour (UAA - Free Report) Ahead of Q4 Earnings?
Under Armour shares popped through late-afternoon trading Friday, just a few days before the sportswear firm reports its fourth-quarter financial results. This means it’s time to see what to expect from Under Armour before the opening bell Tuesday.
Under Armour has undertaken a huge restructuring plan that could cost the company as much $220 million. The plan has seen it cut its workforce and try to streamline both its go-to-market strategy and product offerings.
Unfortunately for investors, Under Amour’s revamp has not led to the comeback that many might have hoped. In fact, Under Armour announced at its investors day in December 2018—its first in three years—that it expects low single-digit growth annually in North America from 2019 through 2023. This came after Under Armour’s overall Q3 revenues climbed just 2% to reach $1.44 billion.
Plus, UA’s vital North American revenues slipped 1.6% in the third quarter and dropped 5.3% in Q3 2017. Overall, North American sales have now fallen in four of the past five quarters.
Under Armour’s performance stands out in comparison to its sportswear peers, who have all experienced far greater revenue growth. The company’s biggest rivals have rolled out successful direct-to-consumer pushes as they shift away from the likes of wholesalers in an Amazon -obsessed age.
Under Armour’s DTC revenues came in roughly flat last quarter. Meanwhile, its international business has failed to gain the traction Wall Street might have hoped. And the company’s inability to roll out enticing athleisure and non-performance wear offerings has hurt Under Armour as the category continues to expand.
As we touched on at the top, UAA stock jumped 1.7% through late-afternoon trading on Friday to rest at $18.98 a share. This marked a roughly 19% downturn from Under Armour’s 52-week high of $23.28 a share and could set up a solid buying opportunity for those high on Under Armour.
Moving on, Under Armour’s Q4 revenues are projected to pop by 0.78% to reach $1.38 billion, based on our current Zacks Consensus Estimate. This would make the vital holiday shopping period UA’s slowest top-line growth of 2018 after its revenues climbed 2% last quarter, 8% in Q2, and 6% in the first quarter
At the bottom end of the income statement, Under Armour’s adjusted earnings are projected to jump from neutral, or $0.00 a share in the year-ago period, to $0.04 in the fourth quarter.
Investors should note that the company has seen some mixed earnings estimate revision activity recently. However, the last 30 days have been completely positive, which means at least some analyst are more optimistic about Under Armour’s earnings picture.
Under Armour is currently trading at 61.1X forward 12-month Zacks Consensus EPS estimates, which represents a huge premium compared to its industry’s 14.9X average. With that said, Under Armour seems to be more of a trader’s stock than an investor’s at the moment. This means that UAA could see big post-earnings move in either direction.
Under Armour is scheduled to release its fourth quarter financial results before the opening bell on Tuesday, February 12. Make sure to come back to Zacks for a full breakdown.
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