|Bid||142.79 x 1100|
|Ask||142.84 x 900|
|Day's Range||142.38 - 147.63|
|52 Week Range||77.97 - 164.79|
|Beta (3Y Monthly)||1.21|
|PE Ratio (TTM)||49.98|
|Earnings Date||Mar 27, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||162.89|
dropped on Friday after the company was downgraded by an analyst at Wedbush Securities - just days after receiving an upgrade from analysts at Barclays. In a research note to clients on Friday, Wedbush analyst Jen Redding said she was downgrading Lululemon to neutral from outperform and lowering her price target to $155 from $176.
DexCom, comScore, Lululemon, Nike and Under Armour highlighted as Zacks Bull and Bear of the Day
Nike (NKE) posted better-than-expected Q3 fiscal 2019 earnings and revenue after the closing bell Thursday. So, let's break down the sportswear giant's footwear sales, as well as North American and Chinese revenue.
Lululemon Athletica is one of many growth stocks near buy points, but its rebound faces a crucial test in next week's Q4 report.
Lululemon (LULU) shares popped over 3% Thursday heading into the release of its fourth quarter financial results, as part of its larger 2019 climb. The yoga apparel and athleisure giant's bottom-line looks set to surge as it expands its menswear business, its global reach, and more.
Blue jeans giant Levi Strauss (NYSE:LEVI) made its long-awaited return to Wall Street on Thursday, Mar. 21, and it was a smashing success. After reports that the IPO was seeing record demand, that record demand turned into a ton of buying. LEVI stock opened at $22.44, 32% above the $17 IPO price, and has largely held those gains in the first few hours of trading.Source: Shutterstock Despite the hype, I'm cautious on the Levi Strauss IPO. The fundamentals here aren't great.Namely, the jeans market is struggling thanks to the widespread adoption of athleisure styles. I don't see that trend reversing course anytime soon. The numbers speak to these struggles. Levi Strauss has grown revenues at a rather tepid 2% compounded annual growth rate since 2011. Margins are moving higher, but not by much, and net profits have grown at just an 11% clip since 2011.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn other words, the story and numbers here aren't great. Meanwhile, Levi Strauss now has a market cap of nearly $9 billion. Profits next year, in a realistic best-case scenario, will measure around $450 million. That means LEVI stock is trading at roughly 20-times forward earnings. The market average forward multiple is 16, and the average apparel retail forward price-to-earnings multiple is under 18.In other words, with LEVI stock, you're paying an above average multiple for what is a below average growth company. I don't like that combination. As such, I'm fading the hype of the Levi Strauss IPO. Levi Strauss Has Big HeadwindsThe fundamental growth narrative behind LEVI stock isn't all that great. * 10 Stocks on the Rise Heading Into the Second Quarter Over the past ten years, the apparel retail market has dramatically changed. At the core of this change is a secular consumer pivot towards healthier living. Due to things such as the widespread proliferation of photo and video sharing apps like Instagram and Snapchat, as well as a rise in health and wellness awareness, consumers globally are valuing health, wellness and fitness more than ever before. Being fit is cool. Eating well is cool. Working out is cool.A big part of this pivot involves what consumers wear. The archetype of a trendy, healthy, and fit individual is someone who is wearing workout clothes from Lululemon (NASDAQ:LULU) or Nike (NYSE:NKE). As such, consumers have started wearing those clothes all the time now, both because consumers are working out more, and because they want to give the appearance of such.What aren't they wearing anymore? Blue jeans. Over the past decade, the blue jeans category has grown sales at a rather tepid 3.5% annual rate, slower than what has been reported across the whole apparel category. Thus, blue jeans have been losing share in the apparel market for a decade now, and that's largely why Levi Strauss has been a mild 2% revenue grower since 2011.This will continue. To be sure, Levi Strauss will still be a positive revenue grower. But, it will be a slow grower because this whole athleisure trend is as strong as it has been over the past decade, and only gaining momentum. Just look at the high single digit-plus growth rates at Nike, Lululemon and Adidas (OTCMKTS:ADDYY). So long as that trend remains on the up, Levi Strauss will remain on the down.The down means slow revenue growth and mild margin expansion going forward. That's not good enough to buy LEVI stock here. The Stock Is OverpricedAt prices above $22 per share, LEVI stock looks overpriced considering fundamental challenges.Those prices give Levi Strauss a market cap of nearly $9 billion. Assuming adjusted profits grow around 10% next year (as has been the norm over the past several years), then adjusted profits will be $460 million next year. Realistically, considering 2018 was a big up year, 2019's growth will be relatively diluted against a tough lap. As such, a more realistic estimate for 2019 profits is $450 million.That would give LEVI stock a realistic forward P/E multiple of 20. That's too high.Levi Strauss projects as a low single-digit revenue growth company over the next several years, with the risk of negative to flat revenue growth if the athleisure trend picks up more steam. Meanwhile, gross margins are improving, but operating margins aren't growing by all that much, because the company is having to spend big on marketing to keep pace with more popular athleisure brands. These competitive pressures will continue, and put a lid on margin upside potential over the next several years. * The 7 Best Stocks in the Entrepreneur Index All in all, even in a best-case scenario, I think Levi Strauss will do just $2 in earnings-per-share by fiscal 2025. Based on a retail average 18 forward multiple, that implies a fiscal 2024 price target for LEVI stock of $36. Discounted back by 10% per year, that equates to a fiscal 2019 price target of roughly $22.That's where LEVI stock trades today, implying limited upside over the next several months. Bottom Line on LEVI StockLevi Strauss is a fine company, but all the IPO hype would make one think that there's big growth around the corner. There's not. Thanks to continued growth in the athleisure category, there's simply more tepid growth around the corner. So long as that remains true, upside in LEVI stock looks limited from current levels.As of this writing, Luke Lango was long NKE. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Specialty Retail ETFs to Buy the Industry's Disruption * 5 Stocks To Buy for the Happiest Employees * 3 Out-of-Favor Consumer Stocks to Buy Compare Brokers The post Why You Shouldn't Buy the Levi Strauss IPO Hype appeared first on InvestorPlace.
Iconic denim brand Levi Strauss & Co. (NYSE:LEVI) has returned to the New York Stock Exchange and demand for Levi's initial public offering (IPO) is off the charts. After all, it's not often you get to buy into a 166-year-old company. Started by Levi Strauss and his customer Jacob Davis in 1873, the denim maker is taking a second crack at being a public company. The first time was in 1971. It lasted 14 years before descendants of the founder took the company private for $1.6 billion in 1985, at the time, the largest buyout of a publicly held U.S. firm. Flash forward to 2019, and it's ready for a second kick at the cat. InvestorPlace - Stock Market News, Stock Advice & Trading TipsI hadn't thought about writing about Levi's IPO, but then I got an email from Motif Investing offering IPO shares, and I just had to take a look at its prospectus. While I have total respect for the job CEO Chip Bergh has done turning the denim brand around, I've got my doubts about buying LEVI stock, which is bound to be popular. * 7 Beaten-Up Stocks to Buy as They Reverse Course Here's why: 7 Reasons to Steer Clear of the Levi IPO: It's Too PriceyAfter looking at Levi's prospectus, I concluded that its IPO is pricey from a valuation perspective. However, when I saw a MarketWatch article suggesting its stock is undervalued, I just had to understand the authors' rationale.Fundamentally, the authors believe that Levi's enterprise value as a multiple of invested capital at 2.7 times is low given its return on that invested capital over the past five years has never dropped below 14%.Furthermore, the authors conclude that Levi's fair value based on its discounted future cash flow is worth $19 a share or a market cap of $7.3 billion [based on 385.5 million shares outstanding after the IPO].I don't see things nearly as rosy. While you might think it makes sense to compare Levi's to other jean manufacturers and retailers, I'm going to compare it to Lululemon (NASDAQ:LULU), a brand that's still very much in growth mode, and an alternative you ought to consider before pulling the trigger on LEVI stock. In fiscal 2018, Levi's had adjusted EBITDA of $706.6 million. At the midpoint of its $14-$16 price range, Levi's is valued at 8.2 times its adjusted EBITDA [$5.78B divided by $706.6M]. In fiscal 2018, Lululemon's EBITDA was $564.2 million, which means its market cap of $19.3 billion is 34 times EBITDA. On the surface, it seems like a no-brainer in Levi's favor. However, you have to remember that LULU has grown revenues by 66% over the past four years compared to 17% for Levi's. Also, LULU's operating margin is 17%, 740 basis points higher than Levi's. As long as Lululemon continues to grow its men's, Asian and online businesses, it will continue to outperform Levi's.Do yourself a favor and compare Levi's to companies like VF (NYSE:VFC) and American Eagle Outfitters (NYSE:AEO) and you'll see that a valuation of $5.78 billion or more is quite high on a comparative basis. 7 Reasons to Steer Clear of the Levi IPO: Dual-Class Share StructureIf you want to own shares of Levi's be prepared for the Haas family to run the show because they control Levi's through the Class B shares. I'm of two minds when it comes to dual-class share structures. On the one hand, having a majority of the votes in the hands of long-term investors is a good thing. However, on the downside, is the fact that many of the large institutions that will be buying Levi's shares will have almost zero say in how the company is run. Oh, sure, in good times, who cares about corporate governance, but when Levi's falters, and it will because all companies go through difficult times, CEO Charles Bergh will have to convince not only the board but the entire Haas family of his plan to right the ship. * 7 Beaten-Up Stocks to Buy as They Reverse Course That's never an easy task. 7 Reasons to Steer Clear of the Levi IPO: Nothing But JeansWell, that's not entirely true. In recent years, Levi's has done an excellent job reducing its dependence on bottoms. In 2018, 74% of its revenue (both men and women) were from bottoms, 20% from tops, and 6% from footwear and accessories. Three years earlier, bottoms were 83% of its business, tops accounted for 11% of revenue and footwear and accessories the remaining 6%. However, its Levi's brand continues to be the dominant player, accounting for 86% of its overall figure, a number that's barely budged over the past four years. What's confusing about the prospectus is its interchangeable use of the words bottoms and pants. If I'm reading it correctly, pants, which accounted for 68% of overall revenue in 2018, are jeans and khakis, while the figure for bottoms includes pants as wells as skirts and shorts, which accounted for 6% of its overall revenue, flat to 2016.Also, its Dockers brand has slipped in importance, accounting for 7% of overall revenue in 2018, down from 10% in 2015. As denim goes, so goes Levi's. It wasn't too long ago that experts were calling for the demise of the blue jean. While I doubt that's ever going to come to pass, you never know if a new trend will arrive to supplant both denim and athleisure wear in the future. 7 Reasons to Steer Clear of the Levi IPO: Debt on Top of DebtAssuming Levi's goes out at a valuation of $5.78 billion, the company's long-term debt of $1.1 billion will be 19% of its market cap. That's not a massive amount by any means considering it's got more than $700 million on its balance sheet, but I can't help wonder why it hasn't paid down its debt over the past four years.Since fiscal 2014, Levi's paid off just $158 million of its long-term debt, which consists of $486 million in 5% senior notes due in May 2025 and $535 million of 3.375% senior notes due in March 2027. In addition, Levi's has paid out $300 million in dividends to shareholders (primarily the Haas family) over the past five years, not including the $110 million it will pay out in fiscal 2019The company expects to generate as much as $184 million in net proceeds from the sale of Class A shares other than those of the selling shareholders. None of which is earmarked for debt repayment. * 5 Stocks To Buy for the Happiest Employees That seems odd considering the high level of debt and cash. 7 Reasons to Steer Clear of the Levi IPO: Finding the Right BalanceIn the InvestorPlace stock-picking contest for 2019, I picked Canada Goose (NYSE:GOOS) because I believe it's developing a trifecta of growth -- wholesale, direct-to-consumer and online -- that will allow it to grow the top line by double-digits for the next few years without spending too much money on expensive store openings. By limiting the number of retail locations to 20-30 in some of the world's best cities, it provides the brand with a good advertising vehicle, while keeping the costs down. Levi's opened 74 stores in fiscal 2018 alone, including a 17,000 square-foot location in New York City's Times Square. That brings the company's retail footprint to 831 stores with another 500 shop-in-shops. When you consider that those retail stores along with its e-commerce sites accounted for just 35% its overall revenue in fiscal 2018 -- with an embarrassingly low 4% from e-commerce -- I have to wonder if it will ever find the right balance between the three revenue streams. In the last three years, Levi's capital expenditures have increased by 55% from $103 million in 2016 to $159 million in 2018. If it keeps opening 17,000 square-foot flagships, it's going to need a lot more than $159 million to get the job done. I'd watch spending if you do buy shares in the company. 7 Reasons to Steer Clear of the Levi IPO: Bergh's CompensationThere's no question that CEO Charles Bergh has done a good job turning around the brand. Last July, the Harvard Business Review published a good article about Bergh's transformation. If you're planning to invest, I recommend you read it. Of the four part's of Bergh's strategy, all of them are very much a work in progress. The one needing the most work is its goal to become a leading omnichannel retailer. In my books, you're not a successful omnichannel retailer unless you're generating at least 20% of your revenue online. In 2018 and 2017, Levi's e-commerce revenue accounted for just 4% of its overall revenue, well short of what's required for omnichannel excellence. For all Bergh's accomplished, he's still got a lot to prove in my opinion. Ultimately, has he done enough to justify three-year total compensation of $34.3 million, which doesn't include the $138 million worth of stock he'll own or have the right to acquire after Levi's IPO? * 5 of the Best Dow Jones Stocks to Buy for Solid Dividends If you buy Levi's shares, I guess you're going to find out. 7 Reasons to Steer Clear of the Levi IPO: Weak Asian BusinessOf all the negatives I've found about Levi's, the lack of success in Asia is the biggest surprise.In fiscal 2018, its Asian business contributed just 16% of Levi's overall revenue compared to 29% for Europe and 55% for the Americas. On a constant currency basis, its Asian business grew revenues by 8.2% in 2018, 180 basis points less than its growth in the Americas and less than half that of Europe. To catch up to Europe's overall revenue of $1.6 billion, Asia's got to double its sales to do so. True, you can look at it from the perspective that the best is yet to come, but given how competitive the Asian market is, I doubt that's going to happen anytime soon.Worse still, Asia's operating margin in 2018 was 9.8%, 830 and 800 basis points less than Europe and the Americas, respectively. Asia's got to hustle if Levi's hopes to get to $10 billion in sales by 2023. At the time of this writing, Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Specialty Retail ETFs to Buy the Industry's Disruption * 5 Stocks To Buy for the Happiest Employees * 3 Out-of-Favor Consumer Stocks to Buy Compare Brokers The post 7 Reasons to Steer Clear of the Levi IPO appeared first on InvestorPlace.
Blue jeans giant Levi Strauss & Co. began trading Thursday on the New York Stock Exchange at $22.22 a share, after having priced its initial public offering at $17 a share the night prior. The company had initially expected to price its offering between $14 and $16 a share. Levi Strauss on Wednesday night priced its initial public offering at $17, topping original expectations of between $14 and $16 a share.
For one more hint about how the retail sector is faring, investors might want to consider glancing at athletic apparel giant Nike Inc.’s (NYSE: NKE) fiscal Q3 earnings, which are scheduled for release after the closing bell Thursday. Nike is one of the last major companies to report for the recent wave of earnings, when retailers have been showing very mixed results amid changing consumer shopping habits and preferences. Investors may have good reason to have high expectations for NKE this quarter after Foot Locker, Inc. (NYSE: FL) crushed Wall Street estimates for Q3, citing in part success with Nike products, including new releases in Jordan and Air Max.
Heading into its Q3 fiscal 2019 earnings report, which is due out after the closing bell Thursday, Nike is a Zacks Rank 2 (Buy). So, let's see what to expect from the company's third quarter financial results, including North American and Chinese sales.
Investors love Ulta Beauty (NASDAQ:ULTA) at the moment. Ulta stock hit an all-time high on Friday, after a blowout fiscal fourth-quarter earnings report. The 8%+ gain of Ulta stock after the company's earnings were part of a much larger pattern: Ulta Beauty stock has risen 251% in the last five years.Source: Shutterstock That's an impressive performance in any sector. In a retail industry that's had few winners in recent years, it's downright extraordinary. And Ulta stock has earned every cent of its gains. It's established a hugely successful "omnichannel" model. The company's loyalty program is a massive success. As a result, its same-store sales are the envy of the industry. * 5 Cloud Stocks to Help Your Portfolio Fly ULTA has a hugely attractive business. Indeed, I've recommended Ulta Beauty stock on this site several times, most recently in late August. But with Ulta stock soaring after last week's Q4 report, it's difficult to be quite as aggressive at these levels. Ulta stock definitely shouldn't be cheap, but at this price, it's starting to look expensive.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Has Ulta's Performance Really Been That Good?It looks like Ulta Beauty stock easily merits a huge earnings multiple. ULTA's earnings per share, excluding some items, rose 33% in fiscal 2018, which ended in January 2019. Brick-and-mortar retailers simply aren't posting that type of growth these days. So a price-earnings multiple of 25 or 30 for Ulta stock hardly seems out of line.But looking a little closer, we can see that the company's profit growth isn't quite as impressive as its headline numbers suggest. ULTA's EPS got big boosts from tax reform and share buybacks in FY18.The company's pre-tax numbers indicate that its business is doing well, but that its business is not quite as good as its headline EPS figures suggest. The company's operating profit margins actually fell 0.6 percentage points in fiscal 2018, and ULTA only expects them to rebound 0.1-0.2 percentage points in FY19.Ulta is making some investments in its business, which explains some of the pressure on its near-term profits. But as even as its sales performance remains torrid, that top-line growth isn't as profitable as it could or possibly should be. Part of that simply is a retail problem: incremental margins aren't the same as they are in tech. That's the key reason why ULTA isn't going to get the earnings multiple that tech leader like Salesforce.com (NYSE:CRM) obtain.Indeed, in FY18, ULTA's operating profit increased less than 9%. Its FY19 guidance suggests that its growth this year will be closer to 12%-14%. As a result, ULTA expects its EPS to climb 17%-18% this year, thank to its buybacks of Ulta stock. But that's notably lower than the 30%+ EPS growth it posted last year. Is the Valuation of Ulta Stock Too High?Meanwhile, investors truly are paying up for Ulta stock. ULTA trades at nearly 27 times the high end of its FY19 EPS guidance. The only other brick-and-mortar retailers getting similar multiples at the moment are Five Below (NASDAQ:FIVE) and Lululemon Athletica (NASDAQ:LULU).And it's worth noting that both FIVE and LULU seem to have hit a ceiling. Both companies posted blowout earnings toward the end of the summer (Lululemon in late August, Five Below in early September). Both stocks hit all-time highs soon after. From those highs, FIVE is down 14%, and LULU has fallen 13%.It's not impossible that well see something similar happen to Ulta stock. The company's blowout- earnings release led to a series of upgrades by analysts, as Benzinga pointed out. The three bullish analysts moved their price targets to $350, $365, and $380. The highest of those targets suggests about 11% upside in Ulta stock from its current levels.In this market, 27 times forward earnings for mid-teens growth isn't bad. But it's not exactly a steal, either. Again, I have recommended Ulta stock in the past , but the last time I touted it was when it was trading for $230 per share. Elsewhere on this site, Luke Lango accurately predicted that a new line from Kylie Jenner would boost the stock and assigned a price target of $300 to Ulta stock. In that context, $342 seems to be asking a lot. Don't Short Ulta Stock, But Consider Taking ProfitsNone of this means that Ulta Beauty stock should be shorted. A well-run, growing company with room for expansion is the exact opposite of a good short target. Indeed, at at a time when most brick-and-mortar retailers have at least reasonable short interest, ULTA largely has been left alone.But valuation matters , even in what has again become a bull market. And I question whether investors really are going to pay 30 times earnings for Ulta stock. The sector's recent history shows that investors are hesitant to give even the best retailers that valuation.Ulta Beauty still is a wonderful company. Ulta stock, however, simply isn't a bargain anymore.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Invincible Stocks Leading The Bull Market Higher * 5 Dow Jones Stocks Coming to Life * 7 of the Best High-Yield Funds for 2019 and Beyond Compare Brokers The post Ulta Stock Might Need to Settle Down appeared first on InvestorPlace.
Lululemon has plenty more runway for sales growth, Barclays says in a note to clients. Lululemon shares are up more than 80 percent over the past 12 months. Yoga pants and leggings maker Lululemon is a bright spot in retail today, with plenty more runway for sales growth, according to one investment bank.
Lululemon (LULU) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
lululemon (LULU) mirrors strong long-term growth potential, backed by progress on the 2020 strategy. Strong holiday numbers should drive fourth-quarter fiscal 2018 results.
Hanesbrands (HBI) gains from strong brands and solid international presence. However, sluggish innerwear business and adverse currency impacts are headwinds.
Nike Gears Up to Deliver Its Q3 2019 Results(Continued from Prior Part)Nike’s forward PE multiple On March 18, Nike (NKE) was trading at 12-month forward PE multiple of 28.7x. The company’s valuation multiple has risen 24.3% since its
Levi Strauss & Co. is expected to list nearly 37 million shares on the New York Stock Exchange under the ticker symbol LEVI. The offering allows the founder's family to cash out a portion of its stake. This week denim lovers will get the opportunity to invest in more than just a pair of Levi 501s.
Columbia Sportswear (COLM) is committed toward expanding and enhancing its global DTC business. Also, solid international presence helps the company put up a solid past record.
Prestige Consumer (PBH) struggles with soft international and North American businesses. However, it is focusing on empowering healthcare brands.
Nike Gears Up to Deliver Its Q3 2019 ResultsYTD movementFootwear and apparel maker Nike (NKE) is scheduled to report its earnings results for the third quarter of fiscal 2019 (which ended on February 28) after the market closes on March 21. Nike
According to thredUP's 7th annual resale report, the secondhand apparel business is booming and is expected to hit $51 billion by 2023.
Welcome to the latest episode of the Full-Court Finance podcast from Zacks Investment Research where Associate Stock Strategist Ben Rains details what to expect from Nike's (NKE) third-quarter fiscal 2019 financial results that are due out after the closing bell on Thursday, March 21.