Latest news with #HighQuality
Forbes
15 hours ago
- Business
- Forbes
Ollie's Stock: Full Price For A Discount Retailer?
Note: Ollie's FY 2024 ended Feb 2025. Ollie's Bargain Outlet Holdings' stock (NASDAQ: OLLI) may be known for selling closeout merchandise, but its stock is priced anything but low. Trading at approximately $114 per share, OLLI appears significantly valued when compared to its financial fundamentals. Although the company has demonstrated some growth, its lackluster profitability, uncertain performance during downturns, and elevated valuation clearly indicate that this isn't the investment bargain that buyers might expect. Nevertheless, for those investors seeking lower volatility than that associated with individual stocks, the Trefis High Quality portfolio offers an alternative - having outperformed the S&P 500 and delivering returns that exceed 91% since its inception. Ollie's Bargain Outlet reported mixed results for fiscal Q1. Sales increased by 13% year-over-year (y-o-y) to $577 million, though this was below market revenue expectations, raising concerns regarding demand consistency. On the profitability front, the company outperformed expectations: non-GAAP earnings per share were recorded at $0.75, 6% higher than analyst consensus, indicating improved cost controls or margin expansion. Even with a y-o-y decrease in operating margin to 9.7% from 11.1%, management maintained the full-year adjusted EPS guidance at $3.70 at the midpoint. The company wrapped up the quarter with 584 locations, a rise from 516 a year prior, and same-store sales increased by 2.6%, matching the pace of the previous year. The main concern lies with the valuation. Its price-to-sales ratio of 3.1 slightly surpasses the S&P 500's 3.0, but that's only the beginning. The price-to-free cash flow (P/FCF) ratio stands at 30.8, significantly higher than the S&P's 20.5, and the price-to-earnings (P/E) ratio of 35.2 dwarfs the benchmark's 26.4. For a company with modest performance metrics, these numbers imply that investors are overvaluing the underwhelming results. Ollie's has demonstrated respectable top-line growth, with revenues increasing at a 9.1% annual rate over the past three years and rising by 8% y-o-y to reach $2.3 billion in the last twelve months. The issue, however, lies in its profitability profile. The operating margin is at 11.0%, below the S&P 500's 13.2%, while the operating cash flow margin lags at 10.0% compared to the index's 14.9%. Its net income margin of 8.8% also falls short of the S&P's 11.6%. These unsatisfactory margins not only disappoint—they position Ollie's among the weakest performers within the Trefis coverage universe. Ollie's balance sheet is arguably its strongest feature. The company carries $648 million in debt against a market capitalization of $7 billion, resulting in a slim debt-to-equity ratio of just 9.7%—well below the S&P 500's benchmark of 19.9%. Its cash-to-assets ratio, while consistent with the broader index, does little to mitigate the more apparent challenges: weak profitability metrics and an excessive valuation. Perhaps the most alarming indication for investors is OLLI's performance during economic downturns. During the inflation shock in 2022, OLLI stock plummeted 64.2%, while the S&P 500 dropped 25.4%. During the 2020 COVID market crash, it declined 46.2%, compared to the broader index which fell 33.9%. Although the stock has since rebounded, these declines highlight its poor resilience during critical periods. Our dashboard How Low Can Stocks Go During A Market Crash illustrates how key stocks performed during and after the last six market crashes. Ollie's Bargain Outlet may provide customers with great discounts, but the stock is hardly a bargain. The company's modest growth and strong balance sheet are eclipsed by its weak profitability, limited protection against downturns, and a valuation that assumes perfect conditions. However, you might consider exploring the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stock benchmark (a combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) producing robust returns for investors. What accounts for this? The quarterly rebalanced variety of large-, mid-, and small-cap RV Portfolio stocks offered an agile way to capitalize on favorable market conditions while minimizing losses during downturns, as elaborated in RV Portfolio performance metrics.
Forbes
4 days ago
- Business
- Forbes
New Contracts To Drive Palantir Stock?
WASHINGTON, DC - APRIL 30: Shyam Sankar, CTO, Palantir Technologies speaks on stage during The Hill ... More & Valley Forum 2025 at The U.S. Capitol Visitor Center on April 30, 2025 in Washington, DC. (Photo byfor 137 Ventures/Founders Fund/Jacob Helberg ) Palantir Technologies (NASDAQ:PLTR) shares increased by approximately 7% during Friday's trading session after The New York Times revealed that the U.S. government is broadening its adoption of Palantir's main foundry tool throughout federal agencies. The company has witnessed more than $113 million in federal government expenditures since the new Trump administration took office, stemming from both existing contracts and new agreements with the Department of Homeland Security and the Pentagon. Palantir is reportedly also in discussions with the Social Security Administration and the Internal Revenue Service regarding the use of its technology. Additionally, the company secured a $795 million contract from the Department of Defense in late May. Although the company's expansion into the public sector is encouraging, we believe that the stock seems appealing yet unstable – rendering it a difficult choice at its current valuation of around $130. We consider the stock to be quite reactive to negative occurrences, given its exceedingly high valuation. Our assessment arrives from contrasting the current valuation of PLTR stock with its operational performance over recent years, along with its current and historical financial metrics. Our evaluation of Palantir Technologies using key indicators of Growth, Profitability, Financial Stability, and Downturn Resilience indicates that the company possesses a very strong operating performance and financial status, as elaborated below. That being said, if you're looking for potential gains with lower volatility than individual stocks, the Trefis High Quality portfolio serves as an alternative, having outperformed the S&P 500 and generated returns surpassing 91% since its inception. Based on what you pay for each dollar of sales or profit, PLTR stock appears quite pricey when compared to the overall market. • Palantir Technologies has a price-to-sales (P/S) ratio of 91.1 compared to a figure of 3.0 for the S&P 500 • Additionally, the firm's price-to-free cash flow (P/FCF) ratio is 212.7 in contrast to 20.5 for the S&P 500 • Furthermore, it has a price-to-earnings (P/E) ratio of 497.4 versus the benchmark's 26.4 Palantir Technologies' Revenues have increased significantly over recent years. • Palantir Technologies has experienced its top line expand at an average rate of 23.9% during the last 3 years (compared to a 5.5% increase for the S&P 500) • Its revenues have risen by 33.5% from $2.2 billion to $2.9 billion in the past 12 months (against a 5.5% increase for the S&P 500) • Additionally, its quarterly revenues increased by 39.3% to $828 million in the latest quarter from $608 million a year prior (in comparison to a 4.8% improvement for the S&P 500) Palantir Technologies' profit margins are greater than those of most companies within the Trefis coverage universe. • Palantir Technologies' Operating Income over the last four quarters amounted to $406 million, yielding a subpar Operating Margin of 13.0% (versus 13.2% for the S&P 500) • Palantir Technologies' Operating Cash Flow (OCF) during this timeframe was $1.3 billion, suggesting a remarkably high OCF Margin of 42.8% (as opposed to 14.9% for the S&P 500) • For the most recent four-quarter period, Palantir Technologies' Net Income was $571 million – indicating a high Net Income Margin of 18.3% (compared to 11.6% for the S&P 500) Palantir Technologies' balance sheet appears very robust. • Palantir Technologies' Debt level was $245 million at the end of the most recent quarter, while its market capitalization is $310 billion (as of 5/30/2025). This denotes a very strong Debt-to-Equity Ratio of 0.1%(compared to 19.9% for the S&P 500). [Note: A low Debt-to-Equity Ratio is favorable] • Cash (including cash equivalents) constitutes $5.4 billion of the $6.7 billion in Total Assets for Palantir Technologies. This results in a very strong Cash-to-Assets Ratio of 80.6% (versus 13.8% for the S&P 500) PLTR stock has performed significantly worse than the benchmark S&P 500 index during several recent downturns. While investors remain hopeful for a soft landing in the U.S. economy, one might wonder just how severe things could become if another recession were to occur. Our dashboard How Low Can Stocks Go During A Market Crash illustrates how key stocks perform during and after the last six market crashes. • PLTR stock experienced a decline of 84.6% from a high of $39.00 on January 27, 2021, to $6.00 on December 27, 2022, contrasted with a peak-to-trough decrease of 25.4% for the S&P 500 • The stock fully regained its pre-Crisis peak by October 3, 2024 • Since then, the stock has risen to a peak of $131.78 on June 1, 2025 • PLTR stock declined by 53.9% from a peak of $39.00 on January 27, 2021, to $17.96 on December 20, 2021, in contrast to a peak-to-trough drop of 33.9% for the S&P 500 • The stock fully regained its pre-Crisis peak by October 3, 2024 In conclusion, Palantir Technologies' performance across the specified parameters is as follows: • Growth: Extremely Strong • Profitability: Strong • Financial Stability: Extremely Strong • Downturn Resilience: Extremely Weak • Overall: Strong All in all, Palantir's robust recent growth and solid cash flow are commendable, but its exceedingly high valuation and susceptibility to downturns should cause investors to reflect before investing in the stock. Not too pleased with the erratic nature of PLTR stock? The Trefis High Quality (HQ) Portfolio, consisting of 30 stocks, has consistently outperformed the S&P 500 over the previous 4-year period. What's the reason? Collectively, HQ Portfolio stocks delivered superior returns with less risk compared to the benchmark index; a smoother ride is evident in HQ Portfolio performance metrics.
Forbes
4 days ago
- Business
- Forbes
Will Paychex Stock Rise On Its Upcoming Earnings?
CHONGQING, CHINA - MARCH 23: In this photo illustration, the Paychex logo is displayed on a ... More smartphone screen, with the company's latest stock market performance and candlestick charts visible in the background, highlighting Paychex's real-time financial trends, stock price fluctuations, market volatility, and investment developments within the payroll services, human resources, and financial technology sectors, on March 23, 2025 in Chongqing, China. (Photo by) Paychex (NASDAQ:PAYX) is preparing to announce its earnings at the close of June. The consensus forecast anticipates earnings of approximately $1.20 per share, an increase from $1.12 in the same quarter last year, while revenues are projected to rise by about 6.5% year-over-year to $1.38 billion. This growth is expected to be fueled by sustained strength in the company's core Management Solutions and Professional Employer Organization (PEO) services, with operating margins likely trending upward, driven by the application of technology and data analytics, along with improved cross-selling of products. The company boasts a current market capitalization of $57 billion. Its revenue over the past twelve months was $5.4 billion, operating profitably with $2.3 billion in operating profits and net income of $1.7 billion. Nevertheless, for those seeking upside with less volatility than individual stocks, the Trefis High Quality portfolio offers an alternative, having outperformed the S&P 500 and delivered returns surpassing 91% since its inception. See earnings reaction history of all stocks Here are some insights regarding one-day (1D) post-earnings returns: Additional information regarding observed 5-Day (5D) and 21-Day (21D) returns following earnings is compiled along with the statistics in the table below. PAYX 1D, 5D, and 21D Post Earnings Return A relatively lower-risk strategy (though not effective if the correlation is weak) involves understanding the relationship between short-term and medium-term returns after earnings, identifying the pair with the highest correlation, and making the appropriate trade. For instance, if 1D and 5D exhibit the highest correlation, a trader can position themselves as 'long' for the next 5 days if the 1D post-earnings return is positive. Below is some correlation data based on a 5-year and a 3-year (more recent) history. It is noteworthy that the correlation 1D_5D refers to the correlation between 1D post-earnings returns and subsequent 5D returns. PAYX Correlation Between 1D, 5D, and 21D Historical Returns Discover more about Trefis RV strategy, which has outperformed its all-cap stocks benchmark (a combination of all three: the S&P 500, S&P mid-cap, and Russell 2000), yielding strong returns for investors. Additionally, if you're seeking upside with a smoother journey than an individual stock like Paychex, consider the High Quality portfolio, which has outperformed the S&P and achieved over 91% returns since its inception.
Forbes
21-05-2025
- Business
- Forbes
How Will Deckers' Stock React To Its Upcoming Earnings?
Photo byDeckers Outdoor Corp (NYSE: DECK) is set to announce its fiscal fourth-quarter earnings (March year) on Thursday, May 22, 2025, with analysts predicting earnings of 60 cents per share and revenue of $1 billion. This would indicate a 28% decline in earnings year-over-year, along with a 4% sales growth compared to last year's figures of 83 cents per share and $960 million in revenue. Historically, DECK stock has risen 61% of the time after earnings announcements, with a median one-day increase of 9.0% and a maximum recorded rise of 19%. Deckers primarily owns the Ugg and Hoka shoe brands, which represent its two largest and most important sources of revenue, accounting for approximately 68% and 29% of total sales, respectively. In the third quarter of fiscal 2025, both brands showed strong consumer interest, with Ugg achieving a 16% increase in sales while Hoka outperformed with a 24% gain. Despite having a relatively narrow brand portfolio, the company's key products continue to resonate well with consumers. However, investors might currently be concerned about tariff-related issues, as a substantial part of Deckers' footwear manufacturing occurs in Asia. The company currently holds a market capitalization of $19 Bil. Revenue for the past twelve months was $4.9 Bil, and it was operationally profitable with $1.1 Bil in operating profits and $942 Mil in net income. For event-driven traders, historical trends may provide an advantage, whether by positioning before earnings releases or responding to post-release actions. This said, for those wanting upside potential with lower volatility than individual stocks, the Trefis High Quality portfolio offers an alternative, having surpassed the S&P 500 and achieving returns over 91% since its launch. See earnings reaction history of all stocks. Here are some insights on one-day (1D) post-earnings returns: Further data on the observed 5-Day (5D) and 21-Day (21D) returns following earnings are summarized along with the statistics in the table below. DECK Post Earnings Returns A relatively less risky approach (though not useful if the correlation is weak) is to analyze the correlation between short-term and medium-term returns after earnings, identifying a pair with the highest correlation, and executing the suitable trade. For instance, if 1D and 5D show the strongest correlation, a trader could adopt a 'long' position for the next 5 days if the 1D post-earnings return is positive. Below is some correlation data based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D indicates the correlation between 1D post-earnings returns and the following 5D returns. DECK Correlation Between 1D, 5D and 21D Historical Returns Discover more about Trefis RV strategy that has outperformed its all-cap stocks benchmark (the combination of the S&P 500, S&P mid-cap, and Russell 2000), yielding strong returns for investors.
Forbes
21-05-2025
- Business
- Forbes
Is Now The Right Time To Buy Alcoa Stock Given Its Weak Fundamentals?
Alcoa (NYSE:AA) stock appears unappealing – making it a poor choice to purchase at its current price of approximately $29. We believe there are several significant concerns regarding AA stock, which renders it unattractive even though its current valuation is quite low. We reach our conclusion by evaluating the present valuation of AA stock against its operational performance over recent years, along with its current and historical financial standing. Our analysis of Alcoa based on key parameters such as Growth, Profitability, Financial Stability, and Downturn Resilience reveals that the company exhibits a very weak operational performance and financial health, as elaborated below. However, if you are looking for upside with less volatility than individual stocks, the Trefis High Quality portfolio offers an alternative – having outperformed the S&P 500 and achieved returns exceeding 91% since its inception. When assessing what you pay per dollar of sales or profit, AA stock appears inexpensive compared to the broader market. • Alcoa has a price-to-sales (P/S) ratio of 0.5 compared to a figure of 2.8 for the S&P 500 • Furthermore, the company's price-to-free cash flow (P/FCF) ratio is 10.4 compared to 17.6 for S&P 500 • Additionally, it has a price-to-earnings (P/E) ratio of 8.1 versus the benchmark's 24.5 Alcoa's Revenues have experienced notable growth in recent years. • Alcoa's top line has contracted at an average rate of 0.0% over the last 3 years (compared to an increase of 6.2% for S&P 500) • Its revenues have increased by 12.7% from $11 Bil to $12 Bil in the last 12 months (versus a growth of 5.3% for S&P 500) • Furthermore, its quarterly revenues surged 34.3% to $3.5 Bil in the most recent quarter from $2.6 Bil a year prior (compared to 4.9% growth for S&P 500) Alcoa's profit margins are significantly lower than most companies in the Trefis coverage universe. • Alcoa's Operating Income over the last four quarters was $828 Mil, indicating a poor Operating Margin of 7.0% (compared to 13.1% for S&P 500) • Alcoa's Operating Cash Flow (OCF) during this time was $622 Mil, reflecting a very poor OCF Margin of 5.2% (compared to 15.7% for S&P 500) • For the last four-quarter period, Alcoa's Net Income was $60 Mil – indicating a very poor Net Income Margin of 0.5% (compared to 11.3% for S&P 500) Alcoa's balance sheet appears weak. • Alcoa's debt stood at $2.8 Bil at the end of the most recent quarter, while its market capitalization is $7.5 Bil (as of 5/19/2025). This results in a poor Debt-to-Equity Ratio of 43.4% (compared to 21.5% for S&P 500). [Note: A low Debt-to-Equity Ratio is preferable] • Cash (including cash equivalents) constitutes $1.1 Bil of the $14 Bil in Total Assets for Alcoa. This yields a moderate Cash-to-Assets Ratio of 8.1% (compared to 15.0% for S&P 500) AA stock has suffered significantly more than the benchmark S&P 500 index during recent downturns. While investors hope for a soft landing for the U.S. economy, what could happen if another recession occurs? Our dashboard How Low Can Stocks Go During A Market Crash illustrates how key stocks performed during and after the last six market crashes. • AA stock decreased 75.4% from a high of $95.06 on 24 March 2022 to $23.41 on 23 October 2023, compared to a peak-to-trough decline of 25.4% for the S&P 500 • The stock is still unable to recover to its pre-Crisis high • The highest it reached since then is $47.42 on 26 November 2024 and currently trades at approximately $29 • AA stock dropped 74.5% from a high of $21.51 on 1 January 2020 to $5.48 on 20 March 2020, compared to a peak-to-trough decline of 33.9% for the S&P 500 • The stock fully regained its pre-Crisis peak by 1 December 2020 In conclusion, Alcoa's performance across the outlined parameters is as follows: • Growth: Very Strong • Profitability: Extremely Weak • Financial Stability: Weak • Downturn Resilience: Extremely Weak • Overall: Very Weak Therefore, despite its very low valuation, we consider the stock to be unappealing, reinforcing our conclusion that AA is a poor stock to purchase. While it would be prudent to steer clear of AA stock for the time being, you may want to consider the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (a combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to yield strong returns for investors. What accounts for that? The quarterly rebalanced mix of large-, mid- and small-cap RV Portfolio stocks has provided a responsive strategy to capitalize on favorable market conditions while minimizing losses during market downturns, as explained in RV Portfolio performance metrics.
