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Malibu Boats, RealReal, Beyond Meat, PepsiCo and Kroger highlighted as Zacks Bull and Bear of the Day

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Zacks Equity Research
·10 min read
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For Immediate Release

Chicago, IL – January 28, 2021 – Zacks Equity Research Shares of Malibu Boats, Inc. MBUU as the Bull of the Day, The RealReal, Inc. REAL as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Beyond Meat, Inc. BYND, PepsiCo, Inc. PEP and The Kroger Co. KR.

Here is a synopsis of all five stocks:

Bull of the Day:

Malibu Boats is a Zacks #1 (Strong Buy) that operates as a designer, manufacturer and marketer of sports boats, primarily in the US. The company operates in three segments: Malibu, Cobalt and Pursuit. Its brands include, Axis, Cobalt, Pursuit and Malibu, which are primarily used for recreational boating and fishing.

The company had a solid earnings report in November that sent shares grinding higher into the end of the year. After recently hitting highs, investors must decide if there is more meat on the bone as we head into the next earnings report.

About the Company

Malibu is headquartered in Loudon, Tennessee and was founded in 1982. The company operates through a network of independent dealers and employs almost 1,800.

Malibu has a market cap of about $1.5 Billion and has Zacks Style Scores of “A” in Growth and “C” in Value. The Forward PE is 15 and the company offers no dividend

Q1 Earnings

Malibu last reported earnings in early November, with a 30% EPS beat to the upside. The company reported Q1 EPS at $1.13 v the $0.87 expected, while revenue came in at $181M v $179M.

Malibu also guided higher, seeing initial FY2021 revenue up 20%. Adjusted EBITDA was up 28% year over year, while unit volume boats were down 5.3% year over year. Management mentioned that despite the decrease in unit volume, they are optimistic in 2021, given record low inventories and sustained retail demand.

The beat was the eighteenth straight from Malibu, who hasn’t missed on EPS since 2016. The company will look to beat again, when it reports on February 9th.

Estimates

Over the last 30 days, earnings estimates have jumped higher. For the next quarter, we have seen estimates raised by 10%, from $1.41 to $1.56. For the current year, we have seen a 11% move higher in that same time frame.

Numbers are likely headed higher as the recreational marine industry is seeing some positive trends. According to Statistical Surveys, new boat registrations for December 2020 increased 37% year over year, with total registrations rising 13% y/y.

Positive tailwinds in the industry include stimulus, a rising stock market and the post-pandemic need to get out, all which could help boost the quarter.

The Technicals

The stock hit a low of $18.02 during the March COVID panic and bounced to the $50 level, where it chopped around for most of the year. Since the earnings report in November, the stock has grinded higher to the $75 level, recently topping out above $80.

Malibu investors now must wait for earnings as the stock sits near all-time highs. For investors looking to buy the dip, the 21-day MA is $69, while the 50-day is $64. A larger move lower would find support at the $53.50 level, where the 200-day resides.

For those that like Fibonacci levels, the 161.8% target was already hit at $73. However, the next aggressive spot to look for, which is the 261.8% Fib level, is at $107.

Bottom Line

The pent-up demand that will hit this summer after the worst of COVID has passed will be massive. People will want to be out on that lake and in their boat. Considering stimulus, easy money and the urge to get on the water, Malibu is well positioned to see success for the rest of the year.

Bear of the Day:

The RealReal is a Zacks Rank #5 (Strong Sell) that operates an online marketplace for consigned luxury goods. It offers various resale product categories, including women's, men's, kids', jewelry and watches, as well as home and art products.

The stock rallied to IPO levels, but has since pulled back as investors are starting to realize the stock has gotten ahead of itself. With earnings coming up in late February, the bulls have to question whether the more than 100% run higher since last earnings is justified.

About the Company

The RealReal was founded in 2011 and is headquartered in San Francisco, CA. The company employs over 2,300 people, who maintain and operate therealreal.com    

REAL is valued at $2.4 billion and has yet to turn a profit. Because of this high valuation, the company holds a Zacks Style Score of “F” in Value.

Q3 Earnings Miss

The November earnings report saw an 11% surprise on EPS to the downside. The stocks initial reaction was lower, but the overall market strength helped for a 30% rally into the end of 2020.

Looking at the numbers, it's hard to see what investors are seeing. The company missed on both the top and bottom line, while year over year GMV comps were disappointing.

On the plus side, trailing twelve months active buyers were up 14% year over year. However, considering the company's valuation, that growth isn’t spectacular.

Estimates

The company reports EPS on February 23rd and looking at the estimates, they have continued to fall. Over the last 90 days, analysts have lowered estimates form -$0.23 to -$0.39  

Looking at the current year, we see the same trend. Over the same time frame, analysts dropped their numbers from -$1.44 to -$1.66.

Technicals

The stock has been going up with the overall market euphoric run. However, the stock is currently testing its 21-day MA at $24.20. Next level of support is the 50-day at $19.10 and then the 200-day at $15.50.

The $19 level looks OK for buyers that like the stock. That level is a 61.8% Fibonacci retracement level, drawn from the $12.50 lows to recent highs.

In Summary

Stocks continue to go up for no reason in this market. However, for REAL, let's be a bit cautious as we head into earnings. There are plenty of other stocks that are better positioned.

Additional content: 

Beyond Meat-PepsiCo Tie Up for New Plant-Based Snacks 

 

Plant-based food options are gaining increasing prominence as consumers become more conscious of their eating habits and its impact on the environment. Several food companies have been tapping into the evolving opportunities in the plant-based food arena, with Beyond Meat being one of the forerunners. As part of Beyond Meat’s commitment to continue expanding plant-based protein offerings, the company teamed up with PepsiCo to form a new joint venture entity — The PLANeT Partnership, LLC.

The venture seeks to develop, produce and market innovative plant-based protein snacks and beverages. Investors seem to be excited regarding this new tie up, as shares of Beyond Meat increased 17.7% during the trading session on Jan 26. The company’s shares have risen 19.7% in the past three months compared with the industry’s growth of 7.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Efforts to Boost Plant Based Offerings

The newly-established joint venture will make use of Beyond Meat's strong technological expertise in plant-based protein development and PepsiCo's top-notch marketing and commercial capabilities, for creating and scaling new snacks as well as beverage products. The PLANeT Partnership, LLC will be responsible for managing the operations of the joint venture. The financial terms in relation to this partnership have not been disclosed by the companies.

We note that Beyond Meat prides itself on being a leading provider of healthy plant-based meat alternatives whose products are made from simple ingredients and contain no GMOs or bioengineered components. Moreover, the company is committed to expand offerings and achieve greater market presence in plant-based protein food options. It’s partnership with PepsiCo is therefore an ideal opportunity to attain greater global reach as well unlocking new potentials in the plant-based food space.

When it comes to bolstering product offerings, we note that Beyond Meat has been on wheels with innovations. Last year, the company rolled out several new products such as Beyond Breakfast Sausage Links, Beyond Meatballs, Cookout Classic and Beyond Breakfast Sausage. Per media sources, earlier this month the company teamed up with Taco Bell, for developing a fresh plant-based product. Additionally, the company is expanding its distribution capabilities by teaming up with retail giants like The Kroger, Whole Foods Market, Harris Teeter and Albertsons to name a few. These partnerships have been aiding growth in the company’s retail channel. 

Wrapping Up

We note that Beyond Meat has been struggling with weak foodservices business for a while now. This Zacks Rank #5 (Strong Sell) company’s foodservice channel has been adversely impacted by sluggish food-away from home trends amid the coronavirus pandemic. During third-quarter 2020, revenues in the foodservice channel declined on account of stay-at-home practices and curbs on operating capacity, which resulted in closures or considerably reduced operations for many foodservice customers.

Nevertheless, the company’s retail channel continued to remain strong, on account of strong product offerings and partnerships. Moreover, the company’s prudent efforts to expand offerings, places it well to cater to consumers’ rising demand for plant-based offerings.

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PepsiCo, Inc. (PEP) : Free Stock Analysis Report
 
The Kroger Co. (KR) : Free Stock Analysis Report
 
Malibu Boats, Inc. (MBUU) : Free Stock Analysis Report
 
Beyond Meat, Inc. (BYND) : Free Stock Analysis Report
 
The RealReal, Inc. (REAL) : Free Stock Analysis Report
 
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