Why Is At Home Group (HOME) Down 16% Since Last Earnings Report?
A month has gone by since the last earnings report for At Home Group (HOME). Shares have lost about 16% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is At Home Group due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
At Home Posts Wider-Than-Expected Q1 Loss
At Home Group Inc. reported lackluster results in first-quarter fiscal 2021, wherein both the top and bottom lines missed the Zacks Consensus Estimate and declined from the year-ago period.
Lee Bird, its chairman and chief executive officer, said “Early results are strong across all markets with initial sales in reopened stores up solid double-digits during their reopening period quarter-to-date. As the low-price leader in our category with a focus on expanding our omnichannel presence, I am confident that At Home is well positioned for both the near and long-term to take additional share of the large and fragmented home furnishings market.”
Given unprecedented and continued uncertainty owing to the COVID-19 pandemic, At Home has not provided its second-quarter and fiscal 2021 guidance.
Inside the Headlines
The company’s adjusted loss per share of 61 cents was wider than the consensus estimate of a loss of 39 cents. In the year-ago quarter, it registered adjusted earnings of 3 cents per share.
Net sales of $189.8 million lagged the consensus mark of $194.7 million by 2.5%. Also, the reported figure was down 38% from $306.3 million in the prior-year quarter owing to temporary store closures due to the COVID-19 pandemic, partially offset by a net increase in the number of stores.
Comparable-store sales or comps declined 46.5%. The metric declined 0.8% in the prior-year period.
Gross margin of 8.6% decreased 2020 basis points (bps) from the year-ago figure of 28.8%. The downside was primarily due to deleverage on occupancy costs and depreciation as a result of lower sales.
Adjusted selling, general and administrative expenses — as a percentage of net sales — increased 1020 bps year over year to 35%.
Adjusted operating margin contracted a significant 3100 bps to a negative 27.6% from the prior-year level owing to the above-mentioned headwinds. Adjusted EBITDA was negative $14.6 million against $33.8 million a year ago.
At fiscal first quarter-end, the company had 218 stores in 39 states. Out of these, 27 net new stores were opened in the past year, up 14.1% year over year.
As of Apr 25, 2020, At Home reported cash and cash equivalents of $43.6 million compared with $12.1 million at fiscal 2020-end and $15.3 million at the end of fiscal first-quarter 2020. Long-term debt came in at $334.2 million at the end of the fiscal first quarter compared with $336.3 million at fiscal 2020-end.
Net cash used in operating activities was $55.2 million in the first three months of fiscal 2021 compared with $1.2 million in the corresponding period of fiscal 2020.
As of Jun 16, 2020, it had total liquidity of more than $200 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 134.02% due to these changes.
Currently, At Home Group has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, At Home Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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