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Category: Stock Market and At Home Group
Date: 6 September 2020 Stock Price: $6.41 We take a look at the 2nd quarter earnings for their 2020 fiscal year of At Home Group, the home decor superstore group.
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About At Home Group
At Home is the home décor superstore with more than 200 large format stores that we believe dedicate more space per store to home décor than any other player in the industry. We are focused on providing the broadest assortment of products to suit every room, in every style, for every budget. We utilize our space advantage to out-assort our competition, offering more than 50,000 unique items across broad product categories including furniture, garden, home textiles, housewares, patio, rugs, seasonal décor, tabletop décor and wall décor.
Our differentiated merchandising strategy allows us to identify trends in the marketplace and then value-engineer products to provide desirable aesthetics at attractive price points for our customers. The majority of our products are unbranded, private label or specifically designed for us. We believe that our broad and comprehensive offering and compelling value proposition combine to create a leading destination for home décor with the opportunity to continue taking market share in a large and highly fragmented industry.
Our differentiated merchandising strategy allows us to identify trends in the marketplace and then value-engineer products to provide desirable aesthetics at attractive price points for our customers. The majority of our products are unbranded, private label or specifically designed for us. We believe that our broad and comprehensive offering and compelling value proposition combine to create a leading destination for home décor with the opportunity to continue taking market share in a large and highly fragmented industry.
Financial overview of At Home Group's latest earnings report
The numbers we are interested in (for the quarter):
- Revenue: $342.321 million (up from $288.493 million from the same quarter of the previous year)
- Cost of sales : $241.923 million (up from $191.115 million for the same quarter of the previous year)
- Net income: $10.382 million (up from from -$10.068 million for the same quarter of the previous year)
- Diluted net income per share: $0.16 (up from -$0.16 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 64.660 million (up from 62.891 million for the same quarter of the previous year)
- PE ratio: 10.5 (based on the earnings for this quarter being repeated for a full year)
- Cash and cash equivalents: $13.103 million
- Cash and cash equivalents per share: $0.20
- Cash and cash equivalents makes up 3% of At Home Group's current market capital
- Cash and cash equivalents makes up 0.45% of At Home Group's total assets
- Inventories: $436.692million
- Inventories makes up 15.1% of At Home Group's total assets
- Total shareholders' equity of At Home Group: $843.407 million
- Shareholders' equity per share: $13.05
- Cash generated from operations: $24.265 million
- Cash generated from operations per share: $0.38
At Home Group's management commentary on the results and earnings guidance
PLANO, Texas--(BUSINESS WIRE)-- At Home Group Inc. (NYSE: HOME), the home décor superstore, today announced its financial results for the second quarter ended July 27, 2019.
Lee Bird, Chairman and Chief Executive Officer, stated, “We are pleased with the second quarter progress we made on our financial objectives. We opened 13 new stores and generated nearly 19% net sales growth, while also reducing inventory levels and navigating unseasonable weather early in the quarter. Considering favorable expense timing, all of our profit metrics, including pro forma adjusted EPS1 of $0.18, were in line with our expectations.”
“I am also pleased with our team’s accomplishments this quarter in successfully navigating a fluid tariff situation and implementing key marketing and merchandising initiatives focused on driving store traffic and strengthening our customer value proposition,” continued Mr. Bird.
“As we look to capitalize on our significant whitespace opportunity while driving meaningful shareholder returns, we are updating our growth targets to better balance store expansion and strong profitability with leverage improvement and positive free cash flow. As a differentiated low-price leader with an unmatched assortment — enabled by a low-cost structure and a flexible real estate strategy — we remain confident that we have the right strategic priorities in place to continue delivering growth and profitability for years to come.”
Outlook & Key Assumptions
Below is an overview of the Company’s outlook and related assumptions for selected third quarter and fiscal 2020 financial data. Since the beginning of fiscal 2020, the Company has implemented the new lease accounting standard, ASC 842 “Leases,” which requires, among other things, a change to the accounting treatment of sale-leaseback transactions and the reclassification of certain of the Company’s financing obligations. For illustrative purposes only, the Company has provided the table below based on management estimates in order to assist investors in understanding the impact of ASC 842 for comparability purposes to fiscal 2019.
Lee Bird, Chairman and Chief Executive Officer, stated, “We are pleased with the second quarter progress we made on our financial objectives. We opened 13 new stores and generated nearly 19% net sales growth, while also reducing inventory levels and navigating unseasonable weather early in the quarter. Considering favorable expense timing, all of our profit metrics, including pro forma adjusted EPS1 of $0.18, were in line with our expectations.”
“I am also pleased with our team’s accomplishments this quarter in successfully navigating a fluid tariff situation and implementing key marketing and merchandising initiatives focused on driving store traffic and strengthening our customer value proposition,” continued Mr. Bird.
“As we look to capitalize on our significant whitespace opportunity while driving meaningful shareholder returns, we are updating our growth targets to better balance store expansion and strong profitability with leverage improvement and positive free cash flow. As a differentiated low-price leader with an unmatched assortment — enabled by a low-cost structure and a flexible real estate strategy — we remain confident that we have the right strategic priorities in place to continue delivering growth and profitability for years to come.”
Outlook & Key Assumptions
Below is an overview of the Company’s outlook and related assumptions for selected third quarter and fiscal 2020 financial data. Since the beginning of fiscal 2020, the Company has implemented the new lease accounting standard, ASC 842 “Leases,” which requires, among other things, a change to the accounting treatment of sale-leaseback transactions and the reclassification of certain of the Company’s financing obligations. For illustrative purposes only, the Company has provided the table below based on management estimates in order to assist investors in understanding the impact of ASC 842 for comparability purposes to fiscal 2019.
At Home Group (NYSE: HOME) stock price history
The image below shows At Home Group (NYSE: HOME) stock price since their listing in August 2016. And the worry for At Home Investors is the fact that it is trading at levels close to it's all time low. When it listed in 2016 it was trading at around $15 a stock, it reached a high towards the middle of 2018 when it was trading at just over $40. And since the middle of 2018 its been a steady decline in the stock price of At Home Group to the current $6.52 a stock. So based on the group's latest earnings report has the group's stock been punished to hard by the markets? Or is there a reason why the stock is trading at close to its all time lows.
At Home Group (NYSE: HOME) latest stock valuation
So has the market been to harsh on At Home Group's stock price in recent times, or does their current financial results warrant the current stock price levels? Based on their latest earnings report as well as the fiscal guidance, our stock valuation models place a target price (full value price) on At Home Group of $12.30. So we do believe the stock is undervalued at its current price and would expect the stock to trend upwards once sentiment towards the group reverses a bit.