Stitch Fix, Inc. (SFIX) | Daily Alert June 15
Stitch Fix reported strong 3Q21 results as its second-highest quarter of net client additions, improving success rates, and strong engagement with new direct buy and Fix preview features all contributed to robust revenue growth and better-than-expected profitability.
The 4Q21 outlook reflects this momentum, with both revenue and EBITDA guidance coming in well ahead of consensus. Meanwhile, the management transition is on track as Founder and CEO Katrina Lake moves into the Executive Chairperson role in August, when current President Elizabeth Spaulding will take over as CEO.
Strong outlook as recent momentum is expected to persist. Stitch Fix provided 4Q21 net revenue guidance of $540-550M, representing 22-24% y/y growth and above consensus of $523M, raising its FY21 net revenue outlook to $2.07-2.08B (vs. $2.02-2.05B prior). 4Q21 adj. EBITDA guidance of $15-20M was in-line with CGe of $18.5M and above consensus at $5M.
Valuation: We are raising estimates and increasing our price target to $76 (from $68), based on 3.3x FY22 revenue (vs. 3.0x prior) and supported by DCF valuation.
Maria Ripps, CFA, Michael Graham, CFA, Jason Tilchen, CFA, Canaccord Genuity Research, canaccordgenuity.com, June 7, 2021
*Berkshire Hathaway Inc. (BRK-B)
Berkshire Hathaway-B Inc.is an Omaha, Nebraska-based holding company for the various investments CEO Warren Buffett has made over the years. Among its numerous holdings are insurance businesses such as GEICO, large energy and utilities businesses, a major railroad, consumer brands such as ice cream chain Dairy Queen, and manufacturers such as aerospace parts manufacturer Precision Castparts Corp. It also owns a huge portfolio of equities.
The latest investment was in financial technology (fintech). Berkshire invested $500 million in the Brazilian fintech start-up called Nubank, which is best known for issuing credit cards. Nubank has 40 million customers and plans to expand its operations into Mexico and Columbia; there have been rumors the company is considering a U.S. IPO in the future.
Berkshire had Q1 2021 operating earnings of $3.05 per share. The bottom line improved 26.6% year over year. Revenues increased 5% year over year to $64.6 billion; operating earnings of $7 billion increased 19.5% year over year.
Share repurchases during Q1 totaled $6.6 billion. In the last 12 months, management has reduced shares outstanding by 6.028%.
David R. Fried, The Buyback Letter, buybackletter.com, 888-289-2225, June 18, 2021
*Corsair Gaming, Inc. (CRSR)
One company serving this increased for gaming equipment is Corsair Gaming, Inc. Corsair Gaming is a maker of highperformance gear and technology for gamers, including PC components and peripherals, streaming equipment and ambient lighting,
Corsair’s product lineup is extensive, spanning 26 categories in two segments: Gamer & Creator Peripherals and Gaming Components & Systems. In just the twelve months ended March 31, 2021, the company launched 84 new products and shipped 33 million units.
The company also operates three subsidiaries: Elgato, which provides premium studio equipment and accessories for content creators, SCUF Gaming, which builds customdesigned controllers for competitive gamers, and Origin PC, a builder of custom gaming and workstation desktop PCs and laptops.
In the first quarter ended March 31, 2021, the company recorded sales of $529.4 million, a gain of 71.6%. Non-GAAP EPS were up 346.2% to $0.58. Management increased its full-year 2021 guidance to expect $1.9-2.1 billion in revenues. This represents growth of roughly 18% at the midpoint over fiscal 2020’s total revenues.
We project long-term growth of sales and earnings at 12.0%. With future P/Es expected to be between 8.8 and 25.0, the stock is a buy up to $33. The current price of $31.93 represents an upside/downside ratio of 3.4:1 and a potential total return of 21.3%.
Doug Gerlach, Smallcapinformer.com, 1-877-33-ICLUB, June 24, 2021