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The Lovesac Company (LOVE - Free Report) is a Zacks Rank #5 (Strong Sell) that designs, manufactures, and sells furniture. The Company offers alternative furniture, sectionals, bean bags, bean bag chairs as well as other accessories such as blankets, footsacs and throw pillows.
The stock was a high flyer in the year after the pandemic. However, in 2022 the sellers knocked it down over 80% from all-time highs.
Lovesac has rallied since earnings, but investors might want to go into profit taking mode as earnings estimates continue to drop.
About the Company
Lovesac is headquartered in Samford, CT. The company was founded in 1995 and employs over 700 people.
The company markets its products primarily through lovesac.com website, as well as showrooms at top tier malls, lifestyle centers, mobile concierges, kiosks, and street locations in 40 states of the United States; and in store pop-up- shops and shop-in-shops.
Lovesac isvalued at $450 million and has a Forward PE of 15. LOVE holds Zacks Style Scores of “A” in Growth, “B” in Value, but “F” in Momentum. The stock pays no dividend.
Q4 Earnings
Lovesac posted earnings in late March, just missing Zacks estimates. This was the first miss since late 2019.
On a positive note, revenues came in above expectations and SSS were up 36%. However, inventory increased due to stock inventory and freight capitalization costs.
The stock reacted positively to the earnings news and traded about 25% higher since the report. While LOVE is well off all-time highs, investors might be getting ahead of themselves as estimates continue to fall.
Estimates
Since earnings, the stock has seen analyst estimates drop across all time frames.
Over the last month, the current quarter has dropped from $0.03 to -$0.41. Next quarters estimates are also falling, moving to $0.04 from $0.27, or 85%.
Looking longer term, next year’s estimates continue to trend lower. Over the last 90 days, estimates have been lowered from $4.31 to $2.79, a drop of 35%.
Clearly the up move in the stock has not yet reflected the drop in expected earnings.
Technical Take
The bulls can look at the chart and feel good for now. Price is trading above the 200-day and 50-day moving averages, which are both under the $27 level. The stock is also just off 2023 highs.
But one issue for the bulls is the $30 area which has been resistance multiple times this year and looks like a tough area to crack. If the stock fell back under the 200-day MA, we could see a quick flush to the $25 level and a move under $24 could motivate the bulls to take the name back to 2023 lows.
Summary
Lovesac was a former high flyer that is seeing a relief bounce. While the chart is looking better, earnings will not cooperate in upcoming quarters. The company might struggle over the short-term and the stock will likely follow suit.
For those interested in the sector, a better option might be Ethan Allen Interiors (ETD - Free Report) . The stock is a Zacks Rank #3 (Hold), and is coming off a 23% EPS surprise.
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Bear of the Day: The Lovesac Company (LOVE)
The Lovesac Company (LOVE - Free Report) is a Zacks Rank #5 (Strong Sell) that designs, manufactures, and sells furniture. The Company offers alternative furniture, sectionals, bean bags, bean bag chairs as well as other accessories such as blankets, footsacs and throw pillows.
The stock was a high flyer in the year after the pandemic. However, in 2022 the sellers knocked it down over 80% from all-time highs.
Lovesac has rallied since earnings, but investors might want to go into profit taking mode as earnings estimates continue to drop.
About the Company
Lovesac is headquartered in Samford, CT. The company was founded in 1995 and employs over 700 people.
The company markets its products primarily through lovesac.com website, as well as showrooms at top tier malls, lifestyle centers, mobile concierges, kiosks, and street locations in 40 states of the United States; and in store pop-up- shops and shop-in-shops.
Lovesac isvalued at $450 million and has a Forward PE of 15. LOVE holds Zacks Style Scores of “A” in Growth, “B” in Value, but “F” in Momentum. The stock pays no dividend.
Q4 Earnings
Lovesac posted earnings in late March, just missing Zacks estimates. This was the first miss since late 2019.
On a positive note, revenues came in above expectations and SSS were up 36%. However, inventory increased due to stock inventory and freight capitalization costs.
The stock reacted positively to the earnings news and traded about 25% higher since the report. While LOVE is well off all-time highs, investors might be getting ahead of themselves as estimates continue to fall.
Estimates
Since earnings, the stock has seen analyst estimates drop across all time frames.
Over the last month, the current quarter has dropped from $0.03 to -$0.41. Next quarters estimates are also falling, moving to $0.04 from $0.27, or 85%.
Looking longer term, next year’s estimates continue to trend lower. Over the last 90 days, estimates have been lowered from $4.31 to $2.79, a drop of 35%.
Clearly the up move in the stock has not yet reflected the drop in expected earnings.
Technical Take
The bulls can look at the chart and feel good for now. Price is trading above the 200-day and 50-day moving averages, which are both under the $27 level. The stock is also just off 2023 highs.
But one issue for the bulls is the $30 area which has been resistance multiple times this year and looks like a tough area to crack. If the stock fell back under the 200-day MA, we could see a quick flush to the $25 level and a move under $24 could motivate the bulls to take the name back to 2023 lows.
Summary
Lovesac was a former high flyer that is seeing a relief bounce. While the chart is looking better, earnings will not cooperate in upcoming quarters. The company might struggle over the short-term and the stock will likely follow suit.
For those interested in the sector, a better option might be Ethan Allen Interiors (ETD - Free Report) . The stock is a Zacks Rank #3 (Hold), and is coming off a 23% EPS surprise.