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Editor's Note: Below is a flashback on our short Weber (WEBR) research calls from our Retail analysts Brian McGough and Jeremy McLean. WEBR was on the tape with a horrible 3Q preannouncement, causing it to fall -13% on the open. WEBR was added as a Best Idea Short on 8/22/21 at $16.18 a share. Today it is $6.47. Click HERE for further in-depth retail research included in Retail Pro. |
HERE'S WHAT OUR RETAIL TEAM WROTE ON (2/14/22)
This WEBR print was a complete validator the thesis we outlined when we went short on 8/22 at $16.
We said it then, and we’ll say it again, this stock is likely headed well under $5. The underlying earnings power here is about $0.20 per share, and a mature, slow growth consumer durable like WEBR should trade at about 13-15x that number.
Yes, we’re talking a $3 stock.
We’ll likely cover when it breaks $5 – or about 50%-60% lower from where it closed today. The company missed on the top line, with an 8% decline vs last year, and a 400bps deceleration from last quarter.
The US was particularly weak – down 13% YY, though sales decelerated in every region on the globe. Management stuck to its full year top line guide, suggesting an acceleration throughout the remainder of the year, which we find very difficult to underwrite given the outsized consumption trends during the pandemic – particularly in the US – that Weber will be unable to comp.
HERE'S WHAT OUR RETAIL TEAM WROTE ON Saturday (7/23)
Traeger announced that its cutting headcount to drive better operation efficiency/margins. This most likely comes due to crashing demand. The stock caught a downgrade alongside that news yesterday.
We think its bearish for the highly levered and expensive grill market share leader in WEBR. Longer term COOK scaling back investment might be a net positive for WEBR to lose share less fast, but the industry direction will drag EBITDA materially lower across the space in the interim.
Putting a more reasonable EBITDA multiple on WEBR means the stock is potentially worth zero due to the debt levels. WEBR is a Best Idea Short.
HERE'S WHAT OUR RETAIL TEAM TWEETED RECENTLY
