Under Armour Inc. (UA, Financial)(UAA, Financial), NIKE Inc. (NKE, Financial), Crocs Inc. (CROX, Financial), Ulta Beauty Inc. (ULTA, Financial) and Funko Inc. (FNKO, Financial) are the favorite picks of Piper Jaffray Companies (PJC, Financial) analyst Erinn Murphy for 2019, Barron’s reported Monday.
Let’s dig in a bit to each of the five retail stocks suggested by Murphy.
Under Armour is a Baltimore, Maryland-headquartered company that produces footwear, sport, and casual apparel. The American company distributes its branded products for men, women and youth mainly in the Americas, Europe, the Middle East, Africa and the Asia-Pacific.
In 2018 Under Armour’s Class A shares increased 18% to $17.67. The share price is below the 50-, 100- and 200-day simple moving average lines.
The indicators on Under Armour show that:
· The market capitalization is $7.58 billion.
· The price-book ratio is 3.92 versus an industry median of 1.54.
· The price-sales ratio is 1.53 versus an industry median of 0.96.
· The price-to-owner-earnings ratio is 32.42 versus an industry median of 19.14.
· The forward price-earnings ratio is 53.19 for Class A stock, and the forward price-earnings ratio is 49.02 for Class B stock both versus an industry median of 16.78.
· The 52-week range is $12.50 to $24.96 for Class A stock.
· The 52-week range is $11.41 to $23.28 for Class C stock.
· The recommendation rating is 3.1 out of 5 for Class A stock.
· The average target price is $20.67 per share of Class A stock.
· The recommendation rating is 3 out of 5 Class C stock.
· The average target price is $15.5 per share of Class C stock.
GuruFocus has assigned a financial strength rating of 6 out of 10 and a profitability and growth rating of 7 out of 10.
The company has generated operating cash flow of $379 million over the last 12 months of operations through the third quarter of 2018. The levered free cash flow was $285.35 million over the same span of time. Under Armour is increasing its operating cash flow, as illustrated in the chart below. The item has increased 1.2% on average every year over the last five years. The company does not pay a dividend, however.
The company closed 2017 with earnings of 19 cents per share on $5.18 billion in revenue. For full-year 2018, consensus says that net earnings will grow to 22 cents per share and revenue will increase by 4.1% to $5.18 billion. Analysts forecast that net earnings will grow an average 40.42% per annum over the next five years.
Following a 17% climb for the 52 weeks through Dec. 31, Nike’s closing share price was $74.1 on Monday for a market capitalization of $117.74 billion. The share price is on par with the 50-day simple moving average line and below the 100- and 200-SMA lines.
The share price was 19.3% off the 52-week low of $62.09 and 16.1% from the 52-week high of $86.04. The price-book ratio is 13.49 versus an industry median of 1.54, the price-sales ratio is 3.26 versus an industry median of 0.96 and the price-earnings ratio is 56.60 compared to an industry median of 18.38. The forward price-earnings ratio is 28.74 versus an industry median of 16.78.
The mean recommendation is 2.1 out of 5 and the average target price is $86.44 per share.
GuruFocus has assigned a financial strength rating of 7 out of 10 and a profitability and growth rating of 8 out of 10.
The operating cash flow for the trailing 12-month period through Aug. 28, 2018, was $5.7 billion. The operating cash flow is growing. The average annual growth was 8.3% over the last five years.
More than 80% of the operating cash flow is free cash flow. Nike is allocating a portion of free cash flow to the payment of dividends, which have been distributed since 1986.
Nike is paying 22 cents per ordinary share for a forward dividend yield of 1.2% versus an industry median of 2.5%. The forward dividend yield is according to Monday's closing share price.
For full fiscal 2019, which will close this year May 31, analysts are forecasting net earnings of $2.64 per share, which is a 10.5% increase from full fiscal 2018, on revenue of $39.22 billion. The revenue is predicted to grow 7.7% on a year-over-year basis.
Net earnings are predicted to increase 14.18% on average every year for the next five years.
Crocs, a Colorado-based distributor of casual lifestyle footwear and accessories worldwide, was trading around $25.98 per share at close on Monday. The share price has increased 100% in 2018, but it is above the 50-, 100- and 200-day simple moving average lines. The 52-week range is $11.65 to $29.8.
Crocs has a market capitalization of $1.74 billion, a price-book ratio of 8.93 versus an industry median of 1.54, a price-sales ratio of 1.74 compared to an industry median of 0.96 and a price-earnings ratio of 108.24 versus an industry median of 18.38.
The recommendation rating is 2.6 out of 5 and the average target price is $28.8 per share.
GuruFocus has assigned a financial strength rating of 8 out of 10 and a profitability and growth rating of 6 out of 10.
The company has produced $103.72 million in cash flow over the last 12 months of operations through the third quarter of 2018. The chart shows operating cash flow is progressing at an average annual growth of 9.3%. The average growth is a mean for the last five years of operations.
Crocs is not distributing a dividend.
The company is also increasing the annual sales turnover even though according to a slower pace than the operating cash flow. The trailing 12-month revenue came in at $1.07 billion through the third quarter of 2018. For full-year 2018, consensus is for 5% sales growth to $1.07 billion, which is expected to back higher earnings of 42 cents per share. Analysts are also forecasting that net earnings will grow 10% on average every year over the next five years.
Ulta Beauty, an American beauty stores chain company, increased 7% in 2018 and the share price was $244.8 on Monday, Dec. 31. The share price is now trading below the 200-, 100- and 50-day simple moving average lines. The market capitalization of the stock is $14.52 billion. The share price at close Monday belongs to a 52-week range of $191.70 to $322.49.
The U.S. beauty retailer company has a price-book ratio of 7.93 versus an industry median of 1.63, a price-sales ratio of 2.28 versus an industry median of 0.68 and a price-earnings ratio of 22.84 compared to an industry median of 19.95.
The recommendation rating is 2 out of 5 and the average target price is $317.59 per share.
GuruFocus has assigned a financial strength rating of 9 out of 10 and a profitability and growth rating of 9 out of 10.
The company is increasing the trailing 12-month at an annual 10.6% speed. The item was $992.49 million at the end of the third quarter of 2018.
Of the trailing 12-month operating cash flow about 54% is free cash flow. Ulta is not paying a dividend.
The company is expected to close full fiscal 2019 which will end Jan. 31, 2019, reporting net earnings of $10.89 per share on revenue of $6.7 billion. On a year-over-year basis, the bottom line should increase 31% while the top line is predicted to grow 13.8%.
Analysts went beyond full fiscal 2019 with their estimates. In fact, they are also predicting that Ulta will grow net earnings by an average of 19.35% every year for the next five years until 2024.
Funko raised 100% in 2018 to $13.2 per share on Monday for a market capitalization of $636.03 million. The share price is below the 200-, 100- and 50-day simple moving average lines. The share price at close Monday was 116% above the 52-week low of $6.11 and 136% from the 52-week high of $31.12.
The price-book ratio is 4.32 versus an industry median of 1.77, the price-sales ratio is 0.84 versus an industry median of 1.89 and the price-earnings ratio is 52.6 compared to an industry median of 20.77.
Funko Inc. is a young company as it was founded only last year. Funko is headquartered in Everett, Washington, and designs, sources and distributes licensed pop culture products in U.S., Vietnam, China and the U.K. The products are mainly sold to specialty retailers, mass-market retailers, distributors for sale to small retailers and through e-commerce sites.
The yearly operating cash flow through Sept. 30, 2018, was $34.8 million, of which almost $13 million was the levered free cash flow. The company is not paying dividends.
Funko produced a revenue of $516.08 million in 2017 and for full fiscal 2018 consensus is for a 26.2% growth to $651.09 million. Analysts estimate the company will continue to grow net earnings over the following five years but at a much slower annual pace of 1.8% on average.
The stock has a recommendation rating of 1.9 out of 5 and an average target price of $20.29 per share.
GuruFocus has assigned to Funko a financial strength rating of 5 out of 10 and a profitability & growth rating of 4 out of 10.
Disclosure: I have no positions in any security mentioned.
