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At Home (HOME) Shares Jump 6.7% on Strong Q4 Guidance

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Zacks Equity Research
·3 min read
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At Home Group Inc.’s HOME shares jumped 6.7% on Jan 8, after the company posted solid preliminary results for fourth-quarter fiscal 2021, ahead of two upcoming analyst conferences.

Key Takeaways

At Home now expects fiscal fourth-quarter comparable store sales growth of 23-24% compared with prior expectation of mid-to-high teens increase.

Lee Bird, chairman and chief executive officer said, "Fourth quarter comps for both our everyday and seasonal assortments are playing out ahead of our expectations, and our balance sheet remains in great shape. We are excited about the continued strong momentum in our business and our inventory position as we head into fiscal 2022."

Notably, the company had total liquidity of $456 million at December-end that included $162 million in cash and $294 million in borrowings available under the credit facility. Meanwhile, it had $360 million liquidity as of Oct 24, 2020 (higher than $305.8 million on Jul 25), including cash of $33.9 million and $360.4 million in borrowings available under the ABL facility.

Strong momentum in housing and repair & remodel (R&R) markets has been driving At Home’s growth. Notably, the company’s fiscal third-quarter adjusted earnings per share of 74 cents topped the Zacks Consensus Estimate of 63 cents by 17.5% and increased 740% year over year. Net sales matched the consensus mark of $470 million. The figure, nonetheless, improved 47.5% from $318.7 million generated in the prior-year quarter. The upside was driven by a 44.1% improvement in comparable store sales or comps and 2.8% net increase in stores. Strong demand and persistent rollout of omni-channel initiatives helped it drive comps.

Precisely, the company has been benefiting from work-from-home or stay-at-home orders amid the COVID-19 pandemic. This has encouraged consumers to take on more home improvement projects.

Shares of this leading home decor superstore have jumped 240.1% over the past year, outperforming the Zacks Retail - Home Furnishings industry’s 57.9% rally. In addition to solid U.S. housing and home improvement trend, the company has been gaining strength from the successful execution of At Home 2.0 strategies, including EDLP+ campaigns, category reinventions and loyalty program expansion.

Zacks Rank & Key Picks

At Home currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Retail-Wholesale sector include Williams-Sonoma, Inc. WSM, Dillard's, Inc. DDS and Beacon Roofing Supply, Inc. BECN. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Williams-Sonoma — a Zacks Rank #1 company — delivered a trailing four-quarter earnings surprise of 219.1%, on average.

Dillard's — also a Zacks Rank #1 stock — earnings for fiscal 2021 are expected to grow 153.9%.

Beacon Roofing — a Zacks Rank #2 (Buy) stock — is expected to register 22.7% earnings growth in fiscal 2021.

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