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Deckers Brands and Floor & Decor have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – November 10, 2023 – Zacks Equity Research shares Deckers Brands (DECK - Free Report) as the Bull of the Day and Floor & Decor Holdings, Inc. (FND - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Wix.com (WIX - Free Report) , Twilio (TWLO - Free Report) and Ferrari (RACE - Free Report) .
Deckers Brands remains one of the hottest retailers in the world. This Zacks Rank #1 (Strong Buy) is hitting new 5-year highs as the all-important winter holiday season approaches.
Deckers Brands designs, manufactures and distributes footwear, apparel and accessories. It's most prominent brand is UGG, but it also owns Koolaburra, HOKA, Teva and Sanuk.
It's products are sold around the world in department and specialty stores as well as company-owned and operated retail stores. Deckers also operates an online store at deckers.com.
Another Beat in the Fiscal 2024 Second Quarter
On Oct 26, Deckers reported its fiscal second quarter results and beat by 54.7%. It reported earnings of $6.82 versus the Zacks Consensus of $4.41. That was a new second quarter earnings record.
It was the 8th earnings beat in a row. Deckers has an outstanding earnings surprise history, with just 1 miss in the last 5 years and it wasn't when the pandemic broke out in 2020, which tripped up many other retailers.
Revenue rose 25% to a record $1.092 billion in the second quarter. Direct-to-consumer rose 38.8% to $331.7 million from $239.1 million. Wholesale sales rose 19.4% to $760.2 million from $636.5 million a year ago.
Domestic sales rose 21.1% to $748 million while international sales rose 33.3% to $343.9 million.
By brand, the flagship UGG, rose 28.1% to $610.5 million from $476.5 million. That's huge growth for the UGG brand, which is well established. But the company pulled forward its fall marketing campaign which usually starts in September, to July. It was successful in capturing more back-to-school sales.
HOKA sales rose 27.3% to $424 million.
Meanwhile, the two smaller brands, Teva and Sanuk, saw sales fall. Teva sales fell 28.4% to $21.5 million while Sanuk decreased 28.5% to $5.4 million.
Deckers also announced that it would divest the Sanuk brand which will allow it to focus on its bigger brands.
Gross margin rose to 53.4% from 48.2%.
Deckers Raised Full Year Guidance
Deckers is optimistic about the holiday season and the full fiscal year as its two flagship brands, UGG and HOKA, continue to perform well.
It raised its full year earnings guidance to a range of $22.90 to $23.25, which was above the Zacks Consensus. As a result, analysts have been revising estimates higher since the report.
9 estimates were raised for fiscal 2024 in the last 30 days, pushing the Zacks Consensus up to $23.29 from $22.40, which is earnings growth of 20.2% as the company made $19.37 in fiscal 2023.
Analysts are also bullish about fiscal 2025 with 8 estimates higher over the last 30 days. Earnings are expected to rise 12.8% in fiscal 2025 as well.
Shares at 5-Year Highs
Deckers shares sold off last year on worries about an inventory build and a possible recession. But this year, they have reversed course and are up 57.7% year-to-date to new 5-year highs.
They aren't cheap. Deckers trades with a forward P/E of 26.9 but you are buying a growth company as you can see in this beautiful price and consensus chart.
This is how you want the price and consensus chart to look, with that consistent year-over-year earnings growth.
Deckers is shareholder friendly with a big share repurchase plan. In the second fiscal quarter it repurchased stock for a total of $185.5 million. As of Sep 30, 2023, it had approximately $1.146 billion remaining on its authorization.
Deckers also has a great balance sheet with $823.1 million in cash and cash equivalents as of Sep 30, 2023, and no outstanding borrowings.
For investors looking for a top retail brand that is executing at a high level, Deckers Brands should be on your short list.
Floor & Decor Holdings, Inc. is facing challenges due to the slow housing market. This Zacks Rank #5 (Strong Sell) is expected to see a double digit decline in earnings this fiscal year.
Floor & Decor is a specialty retailer and commercial flooring distributor operating 207 warehouse-format stores and 5 design studios in 36 states.
It sells hard-surface flooring, including tile, wood, laminate, vinyl, and natural stone along with decorative accessories and wall tile.
Floor & Decor Beats Again
On Nov 2, 2023, Floor & Decor reported third quarter fiscal 2023 results and beat the Zacks Consensus by $0.06. It reported $0.61 versus the consensus of $0.55. It has beat 3 out of the last 4 quarters and has only missed twice in the last 5 years.
Net sales rose 0.9% to $1,107.8 million from $1,097.8 million a year ago. Comparable store sales fell 9.3%.
Operating margin also fell 160 basis points to 7.7% year-over-year.
The company cited continuing economic challenges posed by rising mortgage interest rates, near-record-low existing home sales, ongoing pressure on housing affordability, and slowing sales of large ticket discretionary products. However, it's positioning the company for the eventual turnaround that will come.
Analysts Cut Estimates for Fiscal 2023 and 2024
The estimates are bearish about the rest of this year. 10 estimates were cut in the last week. The Zacks Consensus fell to $2.22 from $2.38.
That's an earnings decline of 19.6% as Floor & Decor made $2.76 last year.
Analysts are bearish on fiscal 2024 too. 10 earnings estimates were cut in the last 7 days as well, pushing the 2024 Zacks Consensus estimate to $2.23 from $2.86. That's just 0.5% earnings growth.
Shares Sink in the Last 3 Months
Floor & Decor has struggled over the last 2 years. Shares are down 41.1% during that time. They had a strong rally to start the year, but over the last 3 months, they're down 26.3%.
Are they cheap?
Floor & Decor trades with a forward P/E of 36.2, which isn't cheap.
Investors might want to wait on the sidelines. The housing market remains challenging. Keep an eye on an eventual turn higher in the earnings.
Additional content:
3 Companies Boosting Outlooks from Earnings Season
Earnings season continues to chug along, picking up notable steam over the last couple of weeks. We’ve received many positive surprises throughout the period, undoubtedly to the likes of investors as companies continue to navigate a unique macroeconomic situation.
Regarding positivity, three companies – Wix.com, Twilio and Ferrari – all delivered results above expectations, with each lifting their outlooks.
Given the strong results, what was there to like in each respective release? Let’s take a closer look.
Ferrari
Luxury sports car manufacturer Ferrari was firing on all cylinders (literally) throughout its latest period, with the company exceeding the Zacks Consensus EPS Estimate by more than 12% and delivering a 2% revenue surprise.
Impressively, the results reflected the sixth consecutive quarter of exceeding consensus earnings and revenue expectations.
The company’s better-than-expected results have been fueled by continued strength among higher-end consumers, with Ferrari’s order book remaining at its highest levels and covering its entire 2025. In fact, shipments throughout the period totaled 3,459, up 217 units, or 9%, compared to the same period last year.
Following the results, Ferrari raised its current year (FY23) guidance thanks to a strong product mix and better-than-expected demand among personalization features. The company now expects higher net revenues, industrial free cash flow, adjusted EPS, and adjusted EBITDA.
Analysts have been taking their current year expectations for Ferrari higher for some time now, with the current $7.00 Zacks Consensus EPS Estimate up nearly 20% over the last year. The current value reflects a 30% boost year-over-year, with the stock also carrying a Style Score of “A” for Growth.
Twilio
Twilio provides a customer engagement platform that drives real-time, personalized experiences for today’s leading brands. The company’s quarterly results have consistently been robust in 2023, with it exceeding the Zacks Consensus EPS Estimate by an average of 160% across its last four releases.
Regarding the release in focus, Twilio exceeded the Zacks Consensus EPS Estimate by 65%, well above the year-ago loss of -$0.27 per share. Quarterly revenue totaled $1.03 billion, 5% ahead of expectations and showing growth of 5% year-over-year.
Twilio’s revenue growth has been remarkable, as we can see below. Please note that this chart is on an annual basis. Concerning its current year (FY23), the Zacks Consensus Estimate of $4.04 billion suggests a 5% climb from FY22.
In addition, Active Customer Accounts totaled 306,000, reflecting growth of 9.3% from the year-ago figure of 280,000. Active Customer Accounts growth bodes highly favorably for the company, reflecting that consumers continue flocking to its platform and, in turn, boosting top line performance.
Given the solid quarterly results, Twilio upped its FY23 guidance for adjusted income from operations, now expecting results in a band of $475 – $485 million. It’s worth noting that this metric has already been revised higher twice throughout 2023, once in May and once in August.
Investors will have to fork up a small premium for the company’s shares, currently trading at a 2.5X forward price-to-sales ratio (F1), above the respective Zacks Internet – Software industry modestly. Still, on a historical basis, the current value is nowhere near the steep 13.5X five-year median and five-year highs of 36.5X.
Wix.com
Wix.com is the leading SaaS website builder platform globally. The company reported Q3 revenue of $393.8 million, up 14% from the year-ago period and ahead of the Zacks Consensus Estimate.
Better than expected revenue generation and improved operational efficiencies boosted free cash flow to $62.8 million. Further, Partners revenue totaled $119.4 million, climbing an impressive 40% from the year-ago period as consumers continue to flock to the company’s platform.
And given the results, Wix.com boosted its FY23 outlook, now expecting full-year revenue in a band of $1.558 - $1.563 billion, up from prior views of $1.543 - $1.556 billion.
It’s worth noting that WIX shares have primarily faced negative reactions following quarterly results. Despite a full-year guidance lift, shares have faced adverse price action in today’s session as well.
Bottom Line
Earnings season continues its rapid pace, with a plethora of companies unveiling quarterly results daily.
So far, the period has primarily been positive, especially when including recent results of these companies. All three raised their outlooks following better-than-expected results.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index.Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Deckers Brands and Floor & Decor have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – November 10, 2023 – Zacks Equity Research shares Deckers Brands (DECK - Free Report) as the Bull of the Day and Floor & Decor Holdings, Inc. (FND - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Wix.com (WIX - Free Report) , Twilio (TWLO - Free Report) and Ferrari (RACE - Free Report) .
Here is a synopsis of all five stocks.
Bull of the Day:
Deckers Brands remains one of the hottest retailers in the world. This Zacks Rank #1 (Strong Buy) is hitting new 5-year highs as the all-important winter holiday season approaches.
Deckers Brands designs, manufactures and distributes footwear, apparel and accessories. It's most prominent brand is UGG, but it also owns Koolaburra, HOKA, Teva and Sanuk.
It's products are sold around the world in department and specialty stores as well as company-owned and operated retail stores. Deckers also operates an online store at deckers.com.
Another Beat in the Fiscal 2024 Second Quarter
On Oct 26, Deckers reported its fiscal second quarter results and beat by 54.7%. It reported earnings of $6.82 versus the Zacks Consensus of $4.41. That was a new second quarter earnings record.
It was the 8th earnings beat in a row. Deckers has an outstanding earnings surprise history, with just 1 miss in the last 5 years and it wasn't when the pandemic broke out in 2020, which tripped up many other retailers.
Revenue rose 25% to a record $1.092 billion in the second quarter. Direct-to-consumer rose 38.8% to $331.7 million from $239.1 million. Wholesale sales rose 19.4% to $760.2 million from $636.5 million a year ago.
Domestic sales rose 21.1% to $748 million while international sales rose 33.3% to $343.9 million.
By brand, the flagship UGG, rose 28.1% to $610.5 million from $476.5 million. That's huge growth for the UGG brand, which is well established. But the company pulled forward its fall marketing campaign which usually starts in September, to July. It was successful in capturing more back-to-school sales.
HOKA sales rose 27.3% to $424 million.
Meanwhile, the two smaller brands, Teva and Sanuk, saw sales fall. Teva sales fell 28.4% to $21.5 million while Sanuk decreased 28.5% to $5.4 million.
Deckers also announced that it would divest the Sanuk brand which will allow it to focus on its bigger brands.
Gross margin rose to 53.4% from 48.2%.
Deckers Raised Full Year Guidance
Deckers is optimistic about the holiday season and the full fiscal year as its two flagship brands, UGG and HOKA, continue to perform well.
It raised its full year earnings guidance to a range of $22.90 to $23.25, which was above the Zacks Consensus. As a result, analysts have been revising estimates higher since the report.
9 estimates were raised for fiscal 2024 in the last 30 days, pushing the Zacks Consensus up to $23.29 from $22.40, which is earnings growth of 20.2% as the company made $19.37 in fiscal 2023.
Analysts are also bullish about fiscal 2025 with 8 estimates higher over the last 30 days. Earnings are expected to rise 12.8% in fiscal 2025 as well.
Shares at 5-Year Highs
Deckers shares sold off last year on worries about an inventory build and a possible recession. But this year, they have reversed course and are up 57.7% year-to-date to new 5-year highs.
They aren't cheap. Deckers trades with a forward P/E of 26.9 but you are buying a growth company as you can see in this beautiful price and consensus chart.
This is how you want the price and consensus chart to look, with that consistent year-over-year earnings growth.
Deckers is shareholder friendly with a big share repurchase plan. In the second fiscal quarter it repurchased stock for a total of $185.5 million. As of Sep 30, 2023, it had approximately $1.146 billion remaining on its authorization.
Deckers also has a great balance sheet with $823.1 million in cash and cash equivalents as of Sep 30, 2023, and no outstanding borrowings.
For investors looking for a top retail brand that is executing at a high level, Deckers Brands should be on your short list.
Bear of the Day:
Floor & Decor Holdings, Inc. is facing challenges due to the slow housing market. This Zacks Rank #5 (Strong Sell) is expected to see a double digit decline in earnings this fiscal year.
Floor & Decor is a specialty retailer and commercial flooring distributor operating 207 warehouse-format stores and 5 design studios in 36 states.
It sells hard-surface flooring, including tile, wood, laminate, vinyl, and natural stone along with decorative accessories and wall tile.
Floor & Decor Beats Again
On Nov 2, 2023, Floor & Decor reported third quarter fiscal 2023 results and beat the Zacks Consensus by $0.06. It reported $0.61 versus the consensus of $0.55. It has beat 3 out of the last 4 quarters and has only missed twice in the last 5 years.
Net sales rose 0.9% to $1,107.8 million from $1,097.8 million a year ago. Comparable store sales fell 9.3%.
Operating margin also fell 160 basis points to 7.7% year-over-year.
The company cited continuing economic challenges posed by rising mortgage interest rates, near-record-low existing home sales, ongoing pressure on housing affordability, and slowing sales of large ticket discretionary products. However, it's positioning the company for the eventual turnaround that will come.
Analysts Cut Estimates for Fiscal 2023 and 2024
The estimates are bearish about the rest of this year. 10 estimates were cut in the last week. The Zacks Consensus fell to $2.22 from $2.38.
That's an earnings decline of 19.6% as Floor & Decor made $2.76 last year.
Analysts are bearish on fiscal 2024 too. 10 earnings estimates were cut in the last 7 days as well, pushing the 2024 Zacks Consensus estimate to $2.23 from $2.86. That's just 0.5% earnings growth.
Shares Sink in the Last 3 Months
Floor & Decor has struggled over the last 2 years. Shares are down 41.1% during that time. They had a strong rally to start the year, but over the last 3 months, they're down 26.3%.
Are they cheap?
Floor & Decor trades with a forward P/E of 36.2, which isn't cheap.
Investors might want to wait on the sidelines. The housing market remains challenging. Keep an eye on an eventual turn higher in the earnings.
Additional content:
3 Companies Boosting Outlooks from Earnings Season
Earnings season continues to chug along, picking up notable steam over the last couple of weeks. We’ve received many positive surprises throughout the period, undoubtedly to the likes of investors as companies continue to navigate a unique macroeconomic situation.
Regarding positivity, three companies – Wix.com, Twilio and Ferrari – all delivered results above expectations, with each lifting their outlooks.
Given the strong results, what was there to like in each respective release? Let’s take a closer look.
Ferrari
Luxury sports car manufacturer Ferrari was firing on all cylinders (literally) throughout its latest period, with the company exceeding the Zacks Consensus EPS Estimate by more than 12% and delivering a 2% revenue surprise.
Impressively, the results reflected the sixth consecutive quarter of exceeding consensus earnings and revenue expectations.
The company’s better-than-expected results have been fueled by continued strength among higher-end consumers, with Ferrari’s order book remaining at its highest levels and covering its entire 2025. In fact, shipments throughout the period totaled 3,459, up 217 units, or 9%, compared to the same period last year.
Following the results, Ferrari raised its current year (FY23) guidance thanks to a strong product mix and better-than-expected demand among personalization features. The company now expects higher net revenues, industrial free cash flow, adjusted EPS, and adjusted EBITDA.
Analysts have been taking their current year expectations for Ferrari higher for some time now, with the current $7.00 Zacks Consensus EPS Estimate up nearly 20% over the last year. The current value reflects a 30% boost year-over-year, with the stock also carrying a Style Score of “A” for Growth.
Twilio
Twilio provides a customer engagement platform that drives real-time, personalized experiences for today’s leading brands. The company’s quarterly results have consistently been robust in 2023, with it exceeding the Zacks Consensus EPS Estimate by an average of 160% across its last four releases.
Regarding the release in focus, Twilio exceeded the Zacks Consensus EPS Estimate by 65%, well above the year-ago loss of -$0.27 per share. Quarterly revenue totaled $1.03 billion, 5% ahead of expectations and showing growth of 5% year-over-year.
Twilio’s revenue growth has been remarkable, as we can see below. Please note that this chart is on an annual basis. Concerning its current year (FY23), the Zacks Consensus Estimate of $4.04 billion suggests a 5% climb from FY22.
In addition, Active Customer Accounts totaled 306,000, reflecting growth of 9.3% from the year-ago figure of 280,000. Active Customer Accounts growth bodes highly favorably for the company, reflecting that consumers continue flocking to its platform and, in turn, boosting top line performance.
Given the solid quarterly results, Twilio upped its FY23 guidance for adjusted income from operations, now expecting results in a band of $475 – $485 million. It’s worth noting that this metric has already been revised higher twice throughout 2023, once in May and once in August.
Investors will have to fork up a small premium for the company’s shares, currently trading at a 2.5X forward price-to-sales ratio (F1), above the respective Zacks Internet – Software industry modestly. Still, on a historical basis, the current value is nowhere near the steep 13.5X five-year median and five-year highs of 36.5X.
Wix.com
Wix.com is the leading SaaS website builder platform globally. The company reported Q3 revenue of $393.8 million, up 14% from the year-ago period and ahead of the Zacks Consensus Estimate.
Better than expected revenue generation and improved operational efficiencies boosted free cash flow to $62.8 million. Further, Partners revenue totaled $119.4 million, climbing an impressive 40% from the year-ago period as consumers continue to flock to the company’s platform.
And given the results, Wix.com boosted its FY23 outlook, now expecting full-year revenue in a band of $1.558 - $1.563 billion, up from prior views of $1.543 - $1.556 billion.
It’s worth noting that WIX shares have primarily faced negative reactions following quarterly results. Despite a full-year guidance lift, shares have faced adverse price action in today’s session as well.
Bottom Line
Earnings season continues its rapid pace, with a plethora of companies unveiling quarterly results daily.
So far, the period has primarily been positive, especially when including recent results of these companies. All three raised their outlooks following better-than-expected results.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index.Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.