Today - Friday, October 28, 2016
- Chipotle (NYSE:CMG) has turned to high-profile investment bankers and lawyers to help defend itself against activist investor Bill Ackman, although he hasn't yet publicly made any demands since becoming Chipotle's second-largest shareholder last month.
- According to Reuters, Goldman Sachs and Morgan Stanley, as well as law firm Wachtell, Lipton, Rosen & Katz, are now working for the U.S. restaurant chain.
Thursday, October 27, 2016
- Toyota (TM -0.3%) is investing in U.S.-based car-sharing startup GetAround in a funding round with some Japanese-based asset managers, according to Nikkei.
- The funding amount is believed to be $10M. Prior investors in GetAround include Marissa Mayer, Ashton Kutcher and Menlo Ventures.
- GetAround lets car owners share their vehicle for income through a peer-to-peer network. Advertised cars on the firm's website include a Tesla Model S, Mini Cooper and BMW Z4.
- GetAround already has about 300K active users in the U.S.
- Amazon (NASDAQ:AMZN) sees an opportunity in the U.S. to open up as many as 2K Amazon Fresh grocery stores in the next ten years, according to Business Insider.
- A 20-store pilot program is expected to be up and running by the end of 2018, with a mix of traditional-style grocery stores and online pickup locations.
- Internal documents reviewed by BI indicate that Amazon is still deciding if the stores will be tied to Amazon Prime memberships.
- Amazon's determination with a large-scale store roll-out could have significance for grocery stores and other retail chains (WMK, SVU, WFM, IMKTA, CASY, KR, SFS, WBA, CASY, WMT, TGT, RAD) as they consider their own future models.
- Retail ETFs: XLY, XRT, VCR, RTH, RETL, FXD, IYC, FDIS, SCC, RCD, UCC, PMR, CNDF, FTXD, JHMC.
- GNC Holdings (GNC -22.6%) trades sharply lower after Q3 earnings missed estimates.
- Same-store sales fell 8.5% during the quarter on a nearly even split between sales weakness at franchised stores and company-owned outlets.
- "We are focused on eliminating confusion regarding our product pricing, providing customers with an improved loyalty program, enhancing the customer experience in our stores and reinvigorating the GNC branded product innovation pipeline," says CEO Robert Moran.
- Shares of GNC are now at multi-year low.
- Previously: GNC Holdings misses by $0.12, misses on revenue (Oct. 27)
- Ford (F -1.4%) says it will idle a plant in Wayne, Michigan an extra two weeks to adjust for low demand for the C-Max hybrid and Focus model.
- The plant idling is part of a broad plan to keep inventory lean for the rest of the year with U.S. car sales leveling out.
- Previously: Ford Motor beats by $0.06, beats on revenue (Oct. 27)
- Previously: Profit pressure at Ford outside of North America (Oct. 27)
- In what could be a significant confidence boost for the U.K., Nissan (OTCPK:NSANY) will keep production of two of its high-selling SUV models in the region.
- "It is a recognition that the government is committed to creating and supporting the right conditions for the automotive industry so it continues to grow – now and in the future," stated U.K. Prime Minister Theresa May.
- The Japanese automaker was given certain assurances and support from the government before deciding to make the post-Brexit investment.
- Chipotle (CMG -0.6%) launched its Tasty Made business today, with a restaurant opening in Lancaster, Ohio complete with a drive-through window.
- The company is keeping it simple with the new chain by only selling burgers, fries and shakes.
- Similar to Five Guys and In-N-Out Burger, burger patties at Tasty Made are cooked fresh, instead of using the frozen fast-food model. The new concept isn't anything for Shake Shack (NYSE:SHAK) and Habit Restaurants (NASDAQ:HABT) to worry about just yet, but the chains will keep a watch on the Tasty Made roll-out.
- Now who in Lancaster can tell us how a Tasty Made burger rates?
- There is some evidence that Buffalo Wild Wings (BWLD +5.3%) is paying attention to the unsolicited advice from activist investor Marcato Capital by focusing on margins.
- "Our goal is to achieve a 20% restaurant level margin by the end of 2018 and we've identified several opportunities in cost of sales, labor, and operating expenses for 2017," CEO Sally Smith said on the earnings call yesterday. Restaurant-level margin was 17.6% in Q3 and is 18.3% YTD.
- "We negotiated reduced pricing on our boneless wings and other chicken that will improve our cost of sales as a percent of restaurant sales by 20 basis points in 2017," she added.
- "On cost of sales, we're focusing on waste reduction at the restaurant level and this will improve cost of sales as a percentage of restaurant sales by another 20 basis points," Smith pointed out.
- Here's the Marcato Capital letter to BWLD as a refresher.
- Earnings call transcript
- Shares of Build-A-Bear Workshop (BBW +14.1%) rocket higher after the company says it's entering Q4 with momentum.
- During Q3, Build-A-Bear stores remodeled in the Discovery format in North America saw an increase in sales of 9%.
- The chain expects to end the year with 345 stores, including 55 in the Discovery format.
- Management says there is no timetable on the strategic review going on at the company.
- WEX (WEX +3.8%) reports Payment processing revenue rose 9.7% to $146.18M in Q3.
- Fleet Solutions revenue advanced 29.3% to $184.76M.
- Travel and Corporate Solutions revenue soar 12.1% to $63.32M.
- Health and Benefit Employee Solutions revenue rose 48.4% to $39.68M.
- Average number of vehicles serviced increased 6% to ~10.3M.
- Fleet solutions payment processing transactions expanded 15% to 102.9M.
- Total travel and corporate solution card purchase volume up 23% to $7.1B.
- Operating margin rate squeezed 1100 bps to 19%.
- Q4 Guidance: Revenue: $272M to $282M; Adjusted net income: $52M to $55M; Adjusted EPS: $1.20 to $1.27; Shares outstanding: ~43M.
- FY2016 Guidance: Revenue: $1B to $1.01B; Adjusted net income: $186M to $189M; Adjusted EPS: $4.53 to $4.60.
- Rush Enterprises (RUSHA +11.8%) trades higher after a healthy Q3 earnings beat amid a sluggish business environment for the company.
- "We are seeing a positive impact from our broad-reaching expense reductions implemented earlier this year and will remain diligent in controlling expenses," says CEO Rusty Rush.
- Rush's Class 8 sales fell 32% during the quarter and accounted for 6.5% of the U.S. Class 8 truck market.
- Previously: Rush beats by $0.07, beats on revenue (Oct. 26)
- Shares of Rush hit a 52-week high of $26.22 earlier.
- Analysts are in with their assessments on Tesla Motors (NASDAQ:TSLA) following the company's Q3 earnings report and updates on initiatives.
- There is a general consensus that Tesla's ability to record a profitable quarter increases the odds the SolarCity (SCTY +5.3%) merger will be approved, although some skepticism and nit-picking can also be found.
- "It was a kitchen sink effort to get the third quarter to look good ahead of the deal vote," says CFRA Research analyst Efraim Levy.
- "Management asserted that it would not need to raise cash, but our model forecasts Tesla ending 2018 with $575 mln, which we think is too close for comfort," maintains Cowen analyst Jeffrey Osbourne.
- "We cannot help but feel that there are some comparability issues relative to the firm’s reported revenue, gross profit, and net income relative to even those analyst estimates included in consensus," adds JPMorgan to the discussion.
- Baird doesn't see it as nearly that gloomy, backing an Outperform rating and $338 price target with major catalysts on the calendar (solar roof event, SCTY vote, Gigfactory media tour, Model X reviews).
- Other investment firms backing their Buy ratings include Credit Suisse ($280 PT), Dougherty ($500 PT), Sterne Agee ($300 PT) and Stifel Nicolaus ($325 PT).
- Previously: Tesla beats by $0.05, misses on revenue (Oct. 26)
- Previously: Tesla Motors stays on track with delivery guidance (Oct. 26)
- Previously: Tesla talks Model 3 ramp during earnings call (Oct. 26)
- Shares of Tesla are up 4.7% at last check and traded as high as $213.70 today.
- Bemis (BMS -2.4%) reports U.S. Packaging net sales fell 4.7% to $657.6M in Q3.
- Global Packaging net sales grew 12.6% to $369.6M (-6% on a constant currency basis).
- Gross margin rate improved 10 bps to 21.9%.
- Adjusted operating margin rate +90 bps to 11.7%.
- FY2016 Guidance: Adjusted EPS: $2.65 to $2.70; Cash from operations: $425M to $465M; Capex: ~$200M.
- Dr Pepper Snapple (DPS +1.2%) expects full-year EPS to fall in a range of $4.32-$4.40 vs. $4.20-$4.30 prior and $4.37 consensus.
- The company reports a 2% gain in carbonated soft drink volume for Q3 to outpace growth in fountain and bottle can businesses.
- Management was quiet about the rumored acquisition of Bai Brands.
- Previously: Dr Pepper Snapple beats by $0.06, beats on revenue (Oct. 27)
- Previously: Dr Pepper Snapple eyes Bai Brands (Oct. 26)
- Tempur Sealy (NYSE:TPX) is up 11.4% after delivering a profit beat with its Q3 report.
- The company's gross margin rate improved 260 bps to 43.5% and EPS was 19% higher than a year ago, despite a drop in revenue.
- Tempur kept a tight lid on expenses during the quarter, with both selling/marketing costs and G&A spending lower than a year ago.
- Shares of TPX are still far away from their 52-week high of $82.61.
- Previously: Tempur Sealy beats by $0.11, misses on revenue (Oct. 27)
- Pinnacle Foods (PF +0.4%) reports net sales rose 19.3% in Q3, primarily due to 19.0% benefit from the Boulder Brands acquisition, as well as higher net price realization of 0.2% and increased volume/mix of 0.1%.
- North America Retail net sales grew 0.8% to $558.5M,reflecting increased volume/mix of 0.5% and higher net price realization of 0.3%.
- Segment sales: Birds Eye Frozen: $308.94M (+4.1%); Duncan Hines Grocery: $249.55M (-3%); Specialty Foods: $79.41M (-3.4%); Boulder Brands: $120.93M.
- Gross profit rate expanded 230 bps to 30.1%.
- Adjusted gross profit rate up 120 bps to 30.2%.
- Adjusted EBIT margin rate increased 70 bps to 17.7%.
- FY2016 Guidance: Boulder Brands net sales: $460M to $480M; Interest expense: ~$140M; Adjusted Diluted EPS: $2.13 to $2.15; Diluted share count: ~118; Capex: $110M to $120M.
- Citigroup upgrades Hershey (HSY +0.5%) to a Buy rating after having the food stock set at Neutral.
- The investment firm reduces its price target on Hershey to $110 from $115 to adjust for the depressed trading level.
- Still lying underneath the company's issues with the Hershey Trust is speculation of a merger with Mondelez International off in the future.
- There's some mind-blowing numbers out on e-commerce as part of the 2016 Adobe holiday season forecast.
- E-commerce sales are expected to increase 11% this year to $91.6B. Though the pace is slower than what was seen in some recent years, it still triples the overall growth rate in retail.
- Cyber Monday is set to be the largest online shopping day of all time, with $3.36B in sales anticipated.
- Large retailers are seen outpacing smaller retailers by a wide margin, 17% growth vs. 7% growth. That means more market share for Amazon (NASDAQ:AMZN), Wal-Mart (NYSE:WMT), Target (NYSE:TGT), Best (NYSE:BBY) and Staples (NASDAQ:SPLS) in comparison to chains which already have a harder time leveraging their shipping costs.
- Adobe says hot gifts this year will include virtual reality devices, Pokemon, Barbie, Lego, Hot Wheels and Frozen toys.
- A stretching out of the holiday season from early October until past Christmas could help FedEx (NYSE:FDX) and UPS (NYSE:UPS) manage the logistics more efficiently.
- Related stocks: SNE, HAS, MAT, NILE, EBAY, DIS.
- Related ETFs: IBUY, XRT.
- Full Adobe report
- Jefferies raises its price target on Boot Barn Holdings (NASDAQ:BOOT) to $15 and backs its Buy rating on the stock.
- There's only one other Wall Street firm (Piper Jaffray) with a bull rating on Boot Barn and the consensus PT on the retailer is right at its current trading price of $11.
- Boot Barn has traded in wide range of $5.20 to $17.12 this year amid a challenging selling environment.
- Huge holiday season pushes by Wal-Mart and Target could be beneficial to Hasbro (NASDAQ:HAS) and Mattel (NASDAQ:MAT), observes TheStreet's Brian Sozzi.
- Both companies are well stocked in toy aisles at their stores and are offering generous terms on shipping amid what looks to be an intriguing mix of toys.
- "I would give the edge to Mattel this year -- big push by both major retailers in ethnically diverse Barbie dolls. Hasbro will have its fair share of Star Wars, board games and Nerf gear on offer, but Mattel's offerings really caught my attention," writes Sozzi.
- Other analysts have postulated that toy spending will hold up this year, despite the uneven consumer spending trends in the U.S.
- Mattel: +17.7% YTD, 18.0 forward PE, 4.75% yield.
- Hasbro: +22.0% YTD, 18.2 forward PE, 2.47% yield.
- JAKKS Pacific (NASDAQ:JAKK): -15.2% YTD, 7.6 forward PE, no dividend since 2013.
- Irish gaming firm SeanieMac Ltd. (OTCPK:BETS) says an upgrade to its new betting site will allow VIP bettors direct access to preferred payment providers and promotions.
- The company says it has tested the updated platform in a live environment to ensure a smooth transition.
- "We are working diligently to grow our customer base and our VIP customer strategy on a daily basis. All of these steps are part of our strategic plan to achieve cash flow positive operations this quarter and turnover revenues of $50,000,000 annually by year end," says CEO Shane O'Driscoll.
- Source: Press Release
- Drew Industries (NYSE:DW) acquires assets of the seating and chassis component division of Atwood Mobile Product for $12.5M.
- The deal is being run through Drew's Lippert subsidiary.
- Atwood Mobile Products is a subsidiary of Dometic Group (OTC:DTCGF).
- Products acquired in the acquisition include seating frames and related components, as well as Atwood's manual, power and scissor jacks, leveling systems and controls, couplers and hitch balls, fifth wheel landing gear and braking components.
- "Atwood's chassis hardware products are a natural fit," notes a Lippert exec.
- The transaction is expected to close in November.
- Source: Press Release
- Planet Fitness (NYSE:PLNT) jumps in early trading after posting sparkling sales growth in Q3.
- Same-store sales were up 10% during the period, while total revenue was up 26% with 37 new franchise stores in operation.
- Planet Fitness ended the quarter with more than 8.7M members.
- Previously: Planet Fitness reports Q3 results (Oct. 26)
- PLNT +7.04% premarket to $21.75 on light volume.
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