English: Tournament Logo (Photo credit: Wikipedia)
DKS : NYSE : US$52.98
Dick’s Sporting Goods operates as a sporting goods retailer in the United States. It provides apparel, athletic shoes and accessories for sports. It also engages in ecommerce and catalog operations. Dick’s Sporting Goods was founded in 1948 and is headquartered in Pennsylvania.
When DKS reports Q1 results on Tuesday, May 21, we are anticipating an in-line quarter (48c on 0% comp), which in our opinion would be a
welcomed result given the challenges it faced during Q1. To no surprise, unfavorable weather likely muted any potential upside, particularly in
golf and team sports/baseball. That said, we believe there were pockets of strength (e.g., guns/ammo, footwear, and apparel) that mitigated the
weaker categories. Looking to the balance of the year, we believe the opportunity to drive outsized comps improves as weather normalizes
and compares ease, while the fundamental long-term growth thesis stays intact. We reiterate our BUY.
We are looking for GG comps to be down mid-teens with DKS store comps flat. Golf and baseball/team sports faced tough comparisons from last year’s perfect Q1 weather and the bat replacement cycle. That said, we believe guns/ammo experienced a significant increase that we estimate added 1% to comp. Also, the UA/NKE/adidas shopin- shops should continue to drive strong sales gains.
According to our industry checks, the competitive environment has remained rational as promotional activity has stayed in check. As such, we do not see risk to merchandise margins and commensurately we expect inventory levels to be clean.
Our $59 PT is an average of 18x 2014E EPS estimate/9x EBITDA
Posted by jackbassteam on May 17, 2013
Dietary supplements, such as the vitamin B supplement show above, are typically sold in pill form. (Photo credit: Wikipedia)
NGVC : NYSE : US$25.20
Currently operating over 65 store locations, Natural Grocers by Vitamin Cottage is a retailer focused exclusively on natural and organic groceries (60% of sales), dietary supplements (30% of sales), and body/pet care products and health-minded books (collectively 10% of sales). Store locations span 13 states primarily across the Western US, with a particular geographic concentration in Colorado (31 stores) and Texas (10 stores).
We believe Natural Grocers is well positioned in a favorable industry with a growth equation that should drive high revenue and earnings growth. We anticipate high-single-digit comps and 20% unit growth should drive industry leading internal growth.
NGVC delivers $4.5 million of revenue upside vs. our forecast on a 10.6% comp. EPS was a penny above consensus while F2013 EPS guidance was unchanged.
F2013 guidance appears very achievable while increased unit growth (now 13 vs. 12) adds a penny to our F2014 EPS estimate to $0.61. F2013E EPS of $0.48 is unchanged.
New unit visibility is improved with all of F2013 leases signed, as well as 4 in F2014, while virtually all of the 2014 new locations have been identified.
The shares sport a premium valuation of 13x F2014E EBITDA reflecting the 20% unit growth and 10+% comps. Our $30 target (from $24) assumes 12.5x our preliminary C2015 EBITDA forecast in the $50+M range.
Posted by jackbassteam on May 13, 2013
An auctioneer and her assistants scan the crowd for bidders. (Photo credit: Wikipedia)
RBA : NYSE : US$20.17
RBA : TSX
Ritchie Bros. Auctioneers is the world’s largest industrial equipment auctioneer. The company conducts auctions in more than 110 locations across the globe, including 44 auction sites in North America, Europe, the Middle East, Asia, and Australia. Auctions are 100% unreserved and consist of used and unused equipment that serves a wide variety of industries, such as agriculture, construction, forestry, mining, petroleum, and transportation.
All amounts in US$ unless otherwise noted.
Lower Target Price:
US$25.00 FROM US$26.50
We reiterate our BUY rating on Ritchie Bros. shares but lower our target price to US$25.00 from US$26.50 after a review of Q1/13 results. RBA reported Q1/13 revenue and adjusted EPS of $102 million and $0.13 versus our estimates of $102 million and $0.15. While the Auction Revenue Rate (ARR) was impressive at 12.07%, exceeding our 11.60% estimate, we do not think it is sustainable at these levels. Disappointingly, a $2 million gross profit beat was offset by SG&A coming in $5 million higher than expected and 13% higher y/y.
The y/y increase was due to:
1) $4.6 million in operating expenses related to AssetNation/EquipmentOne; and
2) $2.5 million related to an increase in the sales force. This brought EBITDA and EPS to $32 million and $0.13 compared to our $35 million and $0.15 estimates. We anticipate better sales force productivity in 2H/13 and into 2014.
Management maintained its 2013 guidance, but now expects GAP at the lower end of its $4.0-4.4 billion guide, while the ARR expectation of between 11.00-11.75% remains unchanged despite ARR coming in above the top end of full-year guidance. We have made some refinements to our earnings model and now expect 2013E EPS of $0.87 (-5%) and $1.00 (-5%) in 2014E. We continue to view RBA’s long-term growth prospects as compelling. Our one-year US$25.00 target price is based on 25x 2014E EPS, supported by our expectation for 15% EPS growth in 2014E, ROIC increasing to 16% in 2014E from 12% in 2012, and, importantly, a significant ramp in dividend per share growth in the coming years.
Posted by jackbassteam on May 2, 2013
English: Bed Bath & Beyond (Photo credit: Wikipedia)
BBBY : NASDAQ : US$65.50
52-week Range: 54.33 – 75.84
Market Cap (M): US$14,582.3
Shares Out (M): 223
FYE Feb 2012A 2013E 2014E
P/Sales (x): 1.3x 1.2x 1.2x
Revenue (M): 10,914.6 11,694.8 12,254.0
EPS: 4.56 4.97 5.75
P/E (x): 14.4x 13.2x 11.4x
Bed Bath & Beyond sells a wide assortment of merchandise including home furnishings, domestics, giftware, health and beauty care items, and infant and toddler merchandise. BBBY operates around 1,000 Bed Bath & Beyond stores, 265 Cost Plus World Markets, 75 stores under the name Christmas Tree Shops or andThat!, 80 buybuy BABY locations, and 45 Harmon stores.
BBBY reported Q4 EPS of $1.68, $0.02 above our estimate and in line with consensus. SSS increased 2.5% on top of +6.8%and in line with consensus. BBBY’s SG&A expense increased 99bps yr./yr. largely as a result of higher advertising expenses and occupancy costs. Our estimate called for 117bps of SG&A expense deleverage. BBBY guided for FY13 EPS to increase in the mid-single to low-double-digit range. Our FY13 EPS estimate remains unchanged at $4.97 (+9%), and the prior consensus estimate of $5.03 implies a 10% increase. We are maintaining our BUY rating with shares trading at 13x our FY13 EPS estimate and 7x FY13E EV/EBITDA.
Cost Plus drove a notable market share gain in Q4. We calculate BBBY increased its share of the home furnishings market by 394bps yr./yr. to 28.8% based on total sales as reported by the U.S. Census Bureau.
We are lowering our Q1 EPS estimate by $0.02 to $0.94. A 20bps decline in our gross margin forecast and a higher tax rate each reduce our estimate by a penny. BBBY guided for Q1 EPS of $0.88-$0.94, and prior consensus is $0.95.
Higher long-term EBIT projections push our DCF-generated price target from $74 to $78.
Posted by jackbassteam on April 15, 2013
Flag of the Hudson’s Bay Company which originated from its days as a British trading company. (Photo credit: Wikipedia)
HBC : TSX : C$15.15
The Hudson’s Bay Company is a leading North American department store retailer, operating stores under the Hudson’s Bay and Home Outfitters banners in Canada, and under Lord & Taylor in the United States.
Q4/F12 LOOKS SOFT, BUT LONGTERM THESIS REMAINS INTACT
We are maintaining our BUY rating and C$21.00 target price despite our expectations for soft Q4/F12 results, as our long-term positive view
HBC is scheduled to report Q4/F12 earnings results on Thursday, April 11, before the market open. A conference call will be held the same day at 8:30 am ET. The dial-in number is 1-877-852-2926.
We are forecasting revenue growth of 4% YoY to $1,350 million. Our EBITDA estimate of $180 million is above last year at $167 million, while our EPS estimate of $0.81 is in-line with Q4/F11.
HBC released its holiday same-store sales in early January, reporting a 6.7% increase at HBC and a 4.4% decline at Lord & Taylor as the division was impacted by store closures due to Hurricane Sandy. Given the weakness in Lord & Taylor sales, we believe the company was heavily promotional for the remainder of the quarter in an attempt to clear out inventory. As a result, we are forecasting a YoY 30 bps decline in gross margin as a percentage of revenue to 38.5%.
Our 12-month C$21.00 target price represents 14.5x our F2013 EPS estimate of $1.45. While we believe Q4/F12 and Q1/F13 have the potential to be soft, as HBC continues to execute on its cost cutting initiatives, namely a reduction in SG&A, we expect margins to increase, leading to robust earnings growth over the course of our forecast period
Posted by jackbassteam on April 9, 2013
Foot Locker (Photo credit: Wikipedia)
FL : NYSE : US$33.15
Foot Locker is an athletic footwear and apparel retailer with over 3,400 stores across North America, Europe, and Australia. The company operates under various banners including Foot Locker, Lady Foot Locker, Kids Foot Locker, Champs Sports, Footaction, and CCS. The Direct-to-Customers segment sells athletic footwear and apparel through catalogs and e-commerce websites.
We had the pleasure of hosting meetings with FL COO Dick Johnson and IR John Maurer, during which the focus centered on store remodels,
apparel, women’s, and gross margin opportunities. The bottom line is we continue to believe FL has ripe opportunities to generate comp growth and expand margins in excess of guidance, particularly with the tailwind in basketball showing no signs of slowing and overall execution remaining solid. At 12x our 2013 EPS estimate, the risk/reward looks favorable and thus we reiterate our BUY and $40 price target.
We believe sales trends have continued from the recently reported HSD run rate in early March as macro pressures have eased and more tax refunds have arrived. The turn in weather should also help the running business, suggesting our 4.5% comp could prove conservative ~200bps.
Apparel margin expansion opportunity exists by managing markdowns in both private label and branded while also increasing mix of the category. Also, the new merchandise allocation system should be a significant contributor to gross margin in 2014 as more refined inventory management can lead to richer margins.
Women’s, while early in its revamp, likely becomes meaningfully accretive to comp growth in 2015, assuming a larger-scale rollout of test concepts (both 602 and re-skinned Lady’s) in 2014.
Our $40 PT reflects a blend of 13x our 2014E EPS/6x EBITDA/DCF.
Posted by jackbassteam on April 8, 2013
Dollar General 300 (Photo credit: Wikipedia)
DG : NYSE : US$50.91
Dollar General said sales growth this year could surpass the strength it saw in 2012 as increased demand for food
and other basics helps drive gains despite consumers’ concerns about the economy.
The company’s fourth-quarter profit came in well ahead of analysts’ expectations despite lighter-than-anticipated sales growth. Dollar General earned $317.4 million, or $0.97 per share, in the fourth quarter ended on February 1, up from $292.5 million, or $0.85 per share, a year earlier.
Sales rose 0.5% to $4.21 billion. Analysts, on average, expected $0.90 per share on sales of $4.26 billion. Sales at stores open at least a year, or same-store sales, rose 3%. The same-store sales surpassed a 1% rise in such sales at Wal-Mart (WMT) U.S. in its fourth quarter, yet came in at the low end of Dollar General’s forecast of 3 to 4% growth.
The sales gains at existing stores were helped primarily by consumables, or items such as food and household basics. More shoppers came into the stores and spent more on their purchases, the discount chain said. Dollar General expects to earn $3.15-3.30 per share on an adjusted basis this year, with total sales up 10-12% and same-store sales up 4-6%.
Posted by jackbassteam on March 27, 2013
Petra’s Yoga Poses around the world (Photo credit: Wikipedia)
LULU : NASDAQ : US$64.70
lululemon athletica Inc. is a designer and retailer of technical athletic apparel operating owned retail stores primarily in North America and Australia. The company offers a range of performance apparel and accessories for women, men and female youth. Its apparel assortment, including items such as fitness pants, shorts, tops and jackets, is designed for healthy lifestyle activities like yoga, running and general fitness.
LULU’s Q4 results were solid at 10% comp/75c EPS vs. our 9%/74c est.
Looking to 2013 and the Luon impact, the worst could be in the stock since we now have a better understanding of the recall impact ($57- 67$M in sales and 25c-27c in EPS). We are comfortable with these assumptions laid out by management, particularly as they assume no recouped sales or substitute purchases. Guidance also implies the majority of the impact will persist through Q2 with some spill into Q3.
While we are disappointed at yet another quality-control issue, it is important to not lose sight of the strength in the underlying business. Traffic since the recall has not ebbed. While most other retailers have had a very challenging start to the year, LULU’s comps were +11% (prior to the recall) indicating no change in demand trends. Assuming quality-control measures are improved and no other issues arise, the risk/reward looks favorable and thus we reiterate our BUY.
LULU appears to be embedding a worst-case scenario by assuming no revenue associated with the affected Luon product; however, we believe there are outlet opportunities that could drive sales upside.
While still early, traffic in stores has not changed since prior to the recall, nor have returns increased – two strong positive indicators.
We arrive at our $87 target by applying a blend of 30x 2014E EPS/20x EBIDTA/DCF.
Posted by jackbassteam on March 25, 2013
francesca (Photo credit: Nicola Brunetto)
FRAN : NASDAQ : US$26.98
Francesca’s Holdings Corporation is the holding company for specialty retailer Francesca’s Collections. Through a web site, Francesca’s sells apparel, jewelry, accessories, and gift items with an assortment tailored to its core 18-35 year-old, fashion-conscious female customer. All amounts in US$
FRAN reported Q4 EPS of $0.33, $0.03 above our estimate and consensus. SSS increased 9.2% on top of +14.7%, versus our estimate and consensus of +8%. The gross margin expanded 92bps in the quarter, better than the 55bps increase we had forecast. FRAN generated 309bps of SG&A expense leverage, compared with our estimate of 110bps improvement.
We are leaving our FY13 EPS estimate unchanged at $1.30, $0.03 ahead of prior consensus and at the high end of guidance of $1.27- $1.30. We are maintaining our BUY rating as FRAN offers industry-leading unit growth and EBIT margins more than double the average retailer, topping 26% in FY12.
Shares trade at 21x our FY13 EPS estimate and 11x FY13E EV/EBITDA. We are raising our DCF-generated price target from $34 to $36.
Greater sales productivity should help offset increased investments. We are raising our Q1 sales projection to +30% from +21% on higher new store productivity, largely offsetting a 160bps increase in our SG&A expense rate estimate. Our Q1 EPS estimate of $0.26 is in line with prior
The company has heightened its focus on ancillary channels. FRAN is planning the first phase of its website re-launch in Q1 and is seeing strong initial results from its three outlet stores.
Posted by jackbassteam on March 21, 2013