For Immediate Release
Chicago, IL – July 15, 2020 – Zacks Equity Research Shares of YETI Holdings, Inc. YETI as the Bull of the Day, Express, Inc. EXPR asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Align Technology, Inc. ALGN and Tesla, Inc. TSLA.
Here is a synopsis of all four stocks:
YETI Holdings designs and distributes consumer outdoor and recreational products under the popular YETI brand. Its line-up is made for activities like hunting, fishing, and camping, and includes premium coolers, drinkware, waterproof and everyday bags, and other outdoor gear.
Q1 Earnings Recap
Back in May, YETI reported first-quarter earnings and revenue that beat the Zacks Consensus Estimate.
Net sales increased 12% to $174 million, while EPS came in at $0.10 per share. Gross margin expanded 370 basis points.
Its direct-to-consumer net sales surged 29% to $79.6 million thanks to high demand for Drinkware and Coolers & Equipment.
Like other consumer discretionary companies, YETI has certainly been impacted by the coronavirus pandemic, but management believes the company is well-positioned to weather any economic downturn.
Looking ahead, YETI withdrew its full-year fiscal 2020 outlook due to broadly felt uncertainty regarding Covid-19.
The company also recently launched the free limited-time video streaming service Yeti+, which offers viewers videos of actual streams from locations in California, Colorado, Hawaii, Oregon, Texas, and Vancouver.
It’s certainly a literal twist on a traditional streaming service, but could find a dedicated user base if the pandemic keeps people indoors for longer.
YETI Is Rallying
Since March 23, shares of YETI are up over 150% compared to the S&P 500’s 37.7% increase. Earnings estimates have been rising too, and YETI is a Zacks Rank #1 (Strong Buy) right now.
For the current fiscal year, five analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up six cents to $1.04 per share. Earnings are expected to fall 13% compared to the prior year period, but 2021 looks strong, and earnings are expected to see double-digit year-over-year growth.
YETI has done a great job over the years at expanding its product portfolio, and their coolers and drinkware have become some of the hottest corporate gifts.
Now that the pandemic has stretched into summer, YETI will likely benefit from high demand for its equipment, as more people look to roadtrips and the great outdoors for a vacation.
If you’re an investor searching for a consumer discretionary stock to add to your portfolio, make sure to keep YETI on your shortlist.
Based in Columbus, OH, Express Inc. is a specialty men’s and women’s retailer that’s found predominantly in malls and shopping centers in the U.S. The company’s core customer is in their 20s and 30s, and offers work, casual, and going-out apparel.
The Coronavirus Impact
Express reported first quarter 2020 results back in June, and it was a tough period for the retailer.
Both the top and bottom line missed the Zacks Consensus Estimate. Total sales declined 53% to $210.3 million, while adjusted earnings fell to a loss of $1.55 per share.
Cash and cash equivalents came in at $236.2 million compared to $144.2 million at the end of Q1 2019.
As of July 5, Express has reopened roughly 95% of its stores, and anticipates the rest of its stores to be opened back up in the coming weeks.
As more stores reopen, the company is seeing much-improved sales and traffic on a week-over-week basis.
Express’ online sales is strong as well, and reflects positive consumer sentiment towards the company’s new product; digital sales actually delivered positive comps in June thanks to an increase in traffic and conversion.
EXPR is now a Zacks Rank #5 (Strong Sell).
Two analysts have cut their full year earnings outlook over the past 60 days, and the consensus estimate has fallen well over two dollars to a loss of $2.50 per share; earnings are expected to see a huge year-over-year decline for 2020, though the bottom line should rebound in the next year.
The company did not provide guidance for the current quarter and fiscal year, following in the footsteps of many other retailers.
Going forward, management will focus on building sufficient liquidity, as well as its long-term objective of sustained profitable growth. However, until the underlying uncertainty from the pandemic eases, it may be a rocky ride for Express for a little while longer.
The Fed's Got Stock Traders' Backs
A big reversal from Monday’s regular trading session saw the major indexes rush back up into the green, with the Dow gaining another 2.1%, or 556 points, the S&P 500 +1.34% and the Nasdaq +0.94%. Aside from a couple better-than-expected Q2 earnings results this morning, the big boost came from Fed Governor Lael Brainard, who spoke at a webcast hosted by the National Association for Business Economics.
In her address, Brainard said that the Fed should utilize large-scale asset buys to keep the economy liquid amid a “thick fog of uncertainty” relating to the coronavirus pandemic, and should be practiced for a “sustained” period. She also said the ongoing economic recovery “will face headwinds for some time,” as we see this week with a re-shutdown of businesses in California amid a spike in new COVID cases.
While this doesn’t necessarily sound like good news, exactly, the Fed is once again saying it sees what the economy will potentially be going through, and is willing to do what it takes to make sure it will not seize up as a result of a turbulent re-entry to a “normal” domestic business existence. This was enough to keep indexes bidding up; the Down is now a mere 10% off its all-time highs, while the S&P 500 is only 6% off the pace. The Nasdaq, which hit new all-time highs mid-day yesterday before the big selloff on the California shutdown news, remains about 3% off new highs.
One stock up big Tuesday was Align Technologies, which rose nearly 11% — nearly the entire gains for the stock in the month of June — though the reason was not due to any earnings surprise (Align reports Q2 a week from tomorrow), but from a strike call option expiring Friday, at $300. Tesla, however, rose again on a fresh price target from Piper Sandler, which now expects Tesla to climb to $2322 per share, more than 50% higher than the current stock price. Tesla is having an unbelievably strong trading year, and saw Robinhood app traders add Tesla positions at a rate of 10K per hour for a portion of the past day.
Brainard’s comments today — as well as those similarly remedy-minded remarks from St. Louis Fed President James Bullard — now put the ball squarely into Congress’ court. Many relief programs passed earlier for COVID-related struggles in terms of businesses shuttering and millions of layoffs are due to expire within the next month; without more stimulus — especially with a renewed shutdown currently in the works in the U.S.’s most populous states — the economy may be in for more hurt than most investors are pricing in at the moment.
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