|
Related Topics
|
Category: Stock Market and Sally Beauty Holdings
Date: 8 November 2019 Stock Price: $20 We take a look at the 4th quarter earnings release of their 2019 fiscal year of Sally Beauty Holdings, a speciality retailer and distributor of professional beauty supplies with revenues of around $3.9 billion annually
|
About Sally Beauty Holdings
Sally Beauty Holdings, Inc. (NYSE: SBH) is an international specialty retailer and distributor of professional beauty supplies with revenues of approximately $3.9 billion annually. Through the Sally Beauty Supply and Beauty Systems Group businesses, the Company sells and distributes through 5,061 stores, including 159 franchised units, and has operations throughout the United States, Puerto Rico, Canada, Mexico, Chile, Peru, the United Kingdom, Ireland, Belgium, France, the Netherlands, Spain and Germany. Sally Beauty Supply stores offer up to 8,000 products for hair color, hair care, skin care, and nails through proprietary brands such as Ion®, Generic Value Products®, Beyond the Zone® and Silk Elements® as well as professional lines such as Wella®, Clairol®, OPI®, Conair® and Hot Shot Tools®. Beauty Systems Group stores, branded as CosmoProf or Armstrong McCall stores, along with its outside sales consultants, sell up to 10,500 professionally branded products including Paul Mitchell®, Wella®, Matrix®, Schwarzkopf®, Kenra®, Goldwell®, Joico® and CHI®, intended for use in salons and for resale by salons to retail consumers
Overview of Sally Beauty's 4th quarter 2019 earnings report
The data below refers to the most recent quarter unless specified otherwise
- Net sales: $965.937 million (down slightly from $965.997 million from the same quarter of the previous year)
- Net sales was basically unchanged over the last 12 months
- Cost of goods sold: $486.646 million (dow from $487.905 million for the same quarter of the previous year)
- Cost of goods sold decreased by -0.3% over the last 12 months
- Net income: $69.007 million (up from $55.186 million for the same quarter of the previous year)
- Diluted earnings per share: $0.58 (up from $0.46 for the same quarter of the previous year)
- PE ratio of Sally Beauty: 8.6
- Diluted weighted-average shares outstanding: 118.997 million (down from 120.441 million for the same quarter of the previous year)
- Cash and cash equivalents: $71.95 million
- Cash and cash equivalents per share: $0.60
- Cash and cash equivalents makes up 3% of Sally Beauty's market capital
- Cash and cash equivalents makes up 3.4% of Sally Beauty's total assets
- Inventories: $952.917 million
- Inventories makes up 45.4% of Sally Beauty's total assets
Sally Beauty's management commentary on their 4th quarter 2019 earnings and 2020 guidance
DENTON, Texas--(BUSINESS WIRE)-- Sally Beauty Holdings, Inc. (NYSE: SBH) (“the Company”) today announced financial results for its fourth quarter and fiscal year ended September 30, 2019.
“Our financial results in the fourth quarter demonstrate that our transformation plan is on track with our expectations,” said Chris Brickman, president and chief executive officer. “We delivered solid results on both the top and bottom lines as we gained momentum on our assortment, guest experience, technology and supply chain efforts. We also generated strong cash flow that was used to invest in the business, reduce our debt levels and fund share repurchases, as promised.” “Fiscal year 2019 was marked by significant change and progress - yet despite the scale and complexity of our transformation efforts, we achieved our full-year financial guidance. We are proud of the teamwork of our global associates. Significant transformation work remains and fiscal year 2020 will mark a change in focus as we expect to build on our fourth quarter results, complete many of our investments, and pivot to projects designed to deliver sustainable topline growth,” Brickman concluded.
“Our financial results in the fourth quarter demonstrate that our transformation plan is on track with our expectations,” said Chris Brickman, president and chief executive officer. “We delivered solid results on both the top and bottom lines as we gained momentum on our assortment, guest experience, technology and supply chain efforts. We also generated strong cash flow that was used to invest in the business, reduce our debt levels and fund share repurchases, as promised.” “Fiscal year 2019 was marked by significant change and progress - yet despite the scale and complexity of our transformation efforts, we achieved our full-year financial guidance. We are proud of the teamwork of our global associates. Significant transformation work remains and fiscal year 2020 will mark a change in focus as we expect to build on our fourth quarter results, complete many of our investments, and pivot to projects designed to deliver sustainable topline growth,” Brickman concluded.
Fiscal Year 2020 Guidance Fiscal year 2019 was a significant investment year and the Company successfully pursued its transformation initiatives. These efforts will continue in fiscal year 2020, leveraging our existing strategic pillars, but with a deliberate pivot to a focus on growth initiatives. The Company’s full fiscal year guidance for 2020 is as follows:
- Consolidated revenue is expected to grow by approximately 1.0% to 2.0%
- Net store count is expected to grow by approximately 30-50 stores, mainly driven by growth in the U.S. and Canadian businesses of both Sally Beauty Supply and Beauty Systems Group
- Consolidated same store sales are expected to increase in the range of 0.5% to 1.5%
- Full-year gross margin is expected to increase modestly, driven by opportunities to improve our costs of goods, the impact of prior year pricing and working more productively with our vendors
- Full-year selling, general, and administrative expenses, as a percentage of sales, are expected to increase modestly based on anticipated increases in labor costs and a substantial marketing investment in the Sally brand, but are expected to be offset by increases in gross margin
- Full-year GAAP operating earnings are expected to be approximately flat
- Full-year adjusted operating earnings are expected to increase by low-single digits
- Full-year effective tax rate is expected to be approximately 27%
- Full-year GAAP and adjusted diluted earnings per share are both expected to grow by low to mid-single digits
- Cash flow from operations for the full-year is expected to be in the range of $340 to $360 million
- Capital expenditures for the full-year are expected to be in the range of $120 million
- Operating free cash flow for the full-year is expected to be in the range of $220 to $240 million
Sally Beauty Holdings (NYSE: SBH) stock price history
The image below, obtained from Google, shows the stock price history of Sally Beauty (NYSE: SBH) over the last 5 years. And its not been a good time for Sally Beauty stockholders. 5 years ago the stock was trading at $30.20 and its currently trading at $20 a stock. Thats a loss of -33% suffered by Sally Beauty stockholders over the last 5 years.
Sally Beauty stock is trading at a lot closer to its 52 week high of $23.61 than it is to its 52 week low of $11.46 which to us is a clear indication that the short term sentiment and momentum of Sally Beauty's stock is positive. And this can be seen by the massive 20% jump in its stock price following the release of their 4th quarter earnings report
Sally Beauty stock is trading at a lot closer to its 52 week high of $23.61 than it is to its 52 week low of $11.46 which to us is a clear indication that the short term sentiment and momentum of Sally Beauty's stock is positive. And this can be seen by the massive 20% jump in its stock price following the release of their 4th quarter earnings report
Recent coverage of Sally Beauty Holdings
The extract below shows recent coverage of Sally Beauty Holdings as obtained from TheStreet.com
DENTON, Texas, Nov. 5, 2019 /PRNewswire/ -- Sally Beauty Holdings, Inc. (NYSE: SBH) announced today the expansion of their ColorView™ AI Technology to the Sally Beauty App and to kiosks in 500 Sally Beauty stores across the country. The implementation is part of the brand's revamp of the customer experience and approach to retail fundamentals. "Sally Beauty customers over-index on mobile phone shopping and are hair color enthusiasts," said JC Johnson, group vice president, digital commerce, strategy and insights. "We are excited to provide a fun experience that allows our customers to dynamically try on color before they commit to a hair transformation. They can try it, share it, buy it, save it, or start all over again, with dozens of our best products." The technology allows consumers to virtually try on hair color and makeup before purchasing, creating a more confident shopping experience. ColorView™ queries the user's preferences and goals, then matches them to recommended product categories and shades. The user can then virtually try on the products and selected shades through real-time Artificial Intelligence and Augmented Reality hair and makeup color technology. "The app uses a framework that allows us to build once and publish to multiple app stores," said Joe Brenner, group vice president & chief information officer.
DENTON, Texas, Nov. 5, 2019 /PRNewswire/ -- Sally Beauty Holdings, Inc. (NYSE: SBH) announced today the expansion of their ColorView™ AI Technology to the Sally Beauty App and to kiosks in 500 Sally Beauty stores across the country. The implementation is part of the brand's revamp of the customer experience and approach to retail fundamentals. "Sally Beauty customers over-index on mobile phone shopping and are hair color enthusiasts," said JC Johnson, group vice president, digital commerce, strategy and insights. "We are excited to provide a fun experience that allows our customers to dynamically try on color before they commit to a hair transformation. They can try it, share it, buy it, save it, or start all over again, with dozens of our best products." The technology allows consumers to virtually try on hair color and makeup before purchasing, creating a more confident shopping experience. ColorView™ queries the user's preferences and goals, then matches them to recommended product categories and shades. The user can then virtually try on the products and selected shades through real-time Artificial Intelligence and Augmented Reality hair and makeup color technology. "The app uses a framework that allows us to build once and publish to multiple app stores," said Joe Brenner, group vice president & chief information officer.
Sally Beauty Holdings (NYSE: SBH) latest stock valuation
So based on Sally Beauty's latest earnings report and the fiscal guidance provided for their 2020 fiscal year what do we value Sally Beauty's stock at? Based on their earnings reported and the guidance provided our valuation model provides a target (full value) price for Sally Beauty's at $37.20 per stock. So it is no wonder the stock of Sally Beauty surged 20% after their latest earnings release.
We therefore believe that the stock of Sally Beauty's stock is undervalued. We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price, which in this case is $37.20. A good entry price into Sally Beauty holdings would therefore be at $33.50 or below.
We expect the stock of Sally Beauty to kick up strongly in coming weeks and months to levels closer to our target (full value) price. Since Sally Beauty is trading at well below our suggested entry price into the group, we rate Sally Beauty's stock as a buy
We therefore believe that the stock of Sally Beauty's stock is undervalued. We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price, which in this case is $37.20. A good entry price into Sally Beauty holdings would therefore be at $33.50 or below.
We expect the stock of Sally Beauty to kick up strongly in coming weeks and months to levels closer to our target (full value) price. Since Sally Beauty is trading at well below our suggested entry price into the group, we rate Sally Beauty's stock as a buy
Next earnings release of Sally Beauty Holdings
It is expected that Sally Beauty Holdings will release their 4th quarter and full fiscal 2019 results in early February 2020
Related Topics
- Monster Beverage Corporation Q3 2019
- Frontdoor Q3 2019
- Great Lakes Dredging Q3 2019
- Barrett Business Services Q3 2019
- SpartanNash Q3 2019