Latest news with #goodwillimpairment
Globe and Mail
11 hours ago
- Business
- Globe and Mail
3 Reasons Take-Two Stock is a Sell Despite a 32% YTD Surge
Take-Two Interactive Software TTWO has experienced a remarkable 32% surge year to date, but investors should view this rally with extreme caution. Despite the recent momentum driven by anticipation around upcoming releases, fundamental weaknesses and concerning financial metrics suggest the stock is significantly overvalued and poised for a correction. Unsustainable Valuation Amid Massive Financial Losses The most glaring red flag for Take-Two investors is the disconnect between the stock's premium valuation and the company's deteriorating financial performance. The gaming giant reported a staggering GAAP net loss of $4.48 billion for fiscal 2025, representing a significant deterioration from the previous year's $3.74 billion loss. This massive deficit was primarily due to goodwill impairment charges of $3.55 billion, signaling that previous acquisitions have failed to deliver expected value. Even more concerning is the company's operational cash flow, which turned negative at $45.2 million for fiscal 2025. For a company trading at current elevated levels following the 32% surge, these metrics paint a picture of fundamental weakness that cannot be ignored. The market appears to be pricing in perfection based on future potential rather than current reality, creating an unsustainable valuation bubble. The company's management reporting shows adjusted EBITDA of only $199.1 million for the full year, a figure that pales in comparison to the market capitalization gains. This disconnect between financial performance and stock price appreciation suggests investors are paying an increasingly premium price for deteriorating fundamentals. The Zacks Consensus Estimate for fiscal 2026 revenues is pegged at $5.99 billion, indicating 6.1% year-over-year growth, with earnings expected to increase 42.93% to $2.93 per share. Find the latest earnings estimates and surprises on Zacks Earnings Calendar. Over-Dependence on Delayed Blockbuster Releases Take-Two's business model has become dangerously dependent on a handful of blockbuster releases, creating significant execution risk that the current valuation fails to account for. The much-anticipated Grand Theft Auto VI, originally expected to drive fiscal 2026 performance, has been pushed to May 26, 2026, falling into fiscal 2027. This delay represents a critical blow to near-term revenue expectations and highlights the company's inability to maintain consistent release schedules. The company's fiscal 2026 guidance of $5.9-$6 billion in net bookings represents merely 5% growth, hardly justifying the stock's recent surge. Furthermore, the concentration risk is evident in the company's revenue breakdown, where a small number of franchises generate the majority of income. NBA 2K, Grand Theft Auto and mobile titles carry the entire operation, leaving little room for diversification when these properties underperform or face delays. Declining Growth Trajectory and Margin Pressures Take-Two's decelerating growth trajectory, combined with increasing cost pressures, has created long-term concerns for investors. The company's guidance indicates that recurrent consumer spending will remain flat in fiscal 2026, a concerning development for a business model that relies heavily on ongoing player engagement and monetization. Mobile revenues, a key growth driver for the industry, are expected to decline, along with Grand Theft Auto Online performance. This dual headwind creates a challenging environment where the company must rely increasingly on new releases to drive growth, rather than building sustainable, recurring revenue streams. Operating expenses have also surged, with management reporting a 3% year-over-year increase in fiscal 2026 expectations, primarily driven by higher marketing costs. This expense growth, combined with modest revenue expansion, suggests margin compression that will pressure profitability metrics further. The company's development costs continue escalating, with capital expenditures of approximately $140 million planned for fiscal 2026. These investments may not yield immediate returns, creating additional pressure on near-term financial performance. Premium Valuation Amid Intense Competition Despite its operational challenges, Take-Two trades at a premium valuation that appears disconnected from its fundamental performance. TTWO's P/E ratio hovers around 55.11, well above the industry's 34.38, suggesting that it is not a great pick for a value investor. The Value Score of F further reinforces a stretched valuation for Take-Two at this moment. TTWO's P/E Ratio Depicts Premium Valuation The stock's 32% year-to-date gain, outperforming the Zacks Consumer Discretionary sector and its rivals, has created an expensive entry point for new investors, particularly given the company's negative earnings and cash flow generation. TTWO Beats Sector, Rivals, YTD The gaming industry landscape has become increasingly competitive, with major technology companies like Microsoft MSFT, Sony SONY and emerging mobile-first developers capturing market share. Traditional publishers like Take-Two face pressure from subscription gaming services, free-to-play models, and changing consumer preferences toward live-service games. Companies like Electronic Arts EA and Activision Blizzard (now part of Microsoft) have demonstrated superior execution in live-service gaming and consistent cash generation. Take-Two's inability to match these operational metrics while trading at comparable or higher valuations suggests significant downside risk. Conclusion Despite the 32% year-to-date surge, Take-Two Interactive presents a selling opportunity for risk-conscious investors. The combination of unsustainable valuation metrics, dangerous dependence on delayed blockbuster releases, and a declining growth trajectory creates a perfect storm for disappointment. Smart investors should consider taking profits from the recent rally and seeking opportunities in companies with more sustainable business models and reasonable valuations. Take-Two currently has a Zacks Rank #4 (Sell). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Only $1 to See All Zacks' Buys and Sells We're not kidding. Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent. Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators, and more, that closed 256 positions with double- and triple-digit gains in 2024 alone. See Stocks Now >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Microsoft Corporation (MSFT): Free Stock Analysis Report Take-Two Interactive Software, Inc. (TTWO): Free Stock Analysis Report Electronic Arts Inc. (EA): Free Stock Analysis Report Sony Corporation (SONY): Free Stock Analysis Report
Yahoo
18 hours ago
- Business
- Yahoo
Crown Crafts Announces Fourth Quarter and Fiscal 2025 Financial Results
GONZALES, La., June 25, 2025 (GLOBE NEWSWIRE) -- Crown Crafts, Inc. (NASDAQ-CM: CRWS) (the 'Company') today reported financial results for the fourth quarter and fiscal year 2025, which ended March 30, 2025. Fourth Quarter Summary Net sales of $23.2 million Gross profit of $4.2 million; gross margin of 18.3% GAAP net loss of $(10.8) million, or $(1.04) per diluted share Adjusted net loss of $(429,000) or adjusted diluted loss per share of $(0.04) (1) Adjusted net loss and adjusted diluted loss per share include an adjustment for a goodwill impairment charge of $13.8 million, or $10.4 million after tax, and $1.32, per share or $1.00, per share after tax. Declared quarterly dividend of $0.08 per share of Series A common stock Fiscal 2025 Summary Net sales of $87.3 million Gross profit of $21.3 million; gross margin of 24.4% GAAP net loss of $(9.4) million, or $(0.90) per diluted share Adjusted net income of $1.0 million, or adjusted diluted earnings per share of $0.10 (1) Adjusted net income and adjusted diluted earnings per share include an adjustment for a goodwill impairment charge of $13.8 million, or $10.4 million after tax, and $1.33, per share or $1.00, per share after tax. (1) Adjusted net (loss) income, adjusted earnings (loss) per share (EPS), diluted, are non-GAAP measures. See "Non-GAAP Measures" and "Reconciliations of GAAP to Non-GAAP Financial Measures" below for reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measures. Olivia Elliott, President and Chief Executive Officer, stated, 'Our fourth quarter sales were 2.9% higher than the prior year quarter, and, while adjusted net income was below our expectations, there were several factors that impacted the quarter, including higher close-out sales at lower margins and the impact of tariffs. For the full year, the Crown Crafts team focused on the strategic initiatives that build for our future success. We acquired Baby Boom Consumer Products in the second quarter, fully integrated Manhattan Toy, continued to reduce operational costs, expanded ecommerce capabilities, and formulated a plan to decrease warehousing expenses. While not all of these measures flowed through this year due to the persistent strain the economy had on our customers, we are optimistic that the work we have done will lead to greater sales and profits over the long term.' Fourth Quarter CommentaryNet sales for the fourth quarter of fiscal 2025 increased 2.9% to $23.2 million, compared to the prior-year quarter, driven by sales associated with the Baby Boom acquisition. Gross margin was 18.3%, a 4.9% decrease versus the prior year quarter due to a higher mix of close-out sales to reduce inventory levels in preparation for future warehouse consolidation and $324,000 of higher tariffs associated with products imported from China. Marketing and administrative expenses were $4.6 million, an increase of 17.0% compared to the prior year quarter. The current year period includes $77,000 in acquisition costs as well as increased marketing and administrative costs associated with the Baby Boom business. During the fourth quarter of 2025, the Company determined that a triggering event occurred in relation to the depressed market price of the Company's common stock and corresponding significant decline in the Company's market capitalization. As a result, the Company performed a quantitative goodwill impairment test that concluded the estimated fair values of its reporting units were lower than their carrying values, indicating that the goodwill within these reporting units was impaired. Consequently, the Company recorded a non-cash goodwill impairment charge of $13.8 million during the quarter ended March 30, 2025. GAAP net loss was $(10.8) million, or $(1.04) per diluted share. Adjusted net loss was $(429,000) or adjusted diluted loss per share of $(0.04), which excludes the $13.8 million goodwill impairment charge. Fiscal 2025 CommentaryNet sales for fiscal 2025 were $87.3 million, essentially flat with fiscal 2024. Gross margin was 24.4%, a 1.8% decrease compared to fiscal 2024, primarily a result of higher rent at the Compton facility, higher closeout sales and increased tariffs. Marketing and administrative expenses were $18.7 million, an increase of 16% compared to fiscal 2024. The current year period includes $244,000 associated with the closure of the Company's subsidiary in the United Kingdom and $1.2 million in costs associated with the Baby Boom acquisition. GAAP net loss was $(9.4) million, or $(0.90) per diluted share. Adjusted net income was $1.0 million or adjusted diluted earnings per share of $0.10, which excludes the $13.8 million goodwill impairment charge. The Company ended fiscal 2025 with $521,000 in cash and cash equivalents. Total inventory at the end of the year was $27.8 million, a 6.4% decrease compared to the end of fiscal 2024. Quarterly Cash DividendOn May 14, 2025, the Company announced that its Board of Directors had declared a quarterly cash dividend on the Company's Series A common stock of $0.08 per share, which will be paid on July 3, 2025, to stockholders of record at the close of business on June 13, 2025. Conference CallThe Company will host a teleconference today at 8:00 a.m. CDT to discuss the Company's results. To join the teleconference, dial 844-861-5504 and ask to join the Crown Crafts call. The teleconference can also be accessed in listen-only mode by visiting the Company's website at The financial information to be discussed during the teleconference may be accessed prior to the call on the investor relations portion of the Company's website. A telephone replay of the teleconference will be available one hour after the end of the call through 4:00 p.m. CDT on September 25, 2025. To access the replay, dial 877-344-7529 in the United States or 412-317-0088 from international locations and enter replay access code 6119723. About Crown Crafts, Inc. Crown Crafts, Inc. designs, markets, and distributes infant, toddler, and juvenile consumer products. Founded in 1957, Crown Crafts is one of America's largest producers of infant bedding, toddler bedding, diaper bags, bibs, toys and disposable products. The Company operates through its wholly owned subsidiaries, NoJo Baby & Kids, Inc. and Sassy Baby, Inc., which market a variety of infant, toddler and juvenile products under Company-owned trademarks, as well as licensed collections and exclusive private label programs. Sales are made directly to retailers such as mass merchants, large chain stores and juvenile specialty stores. For more information, visit the Company's website at Forward-Looking Statements The foregoing contains forward-looking statements within the meaning of the Securities Act of 1933, the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Such statements are based upon management's current expectations, projections, estimates and assumptions. Words such as 'expects,' 'believes,' 'anticipates' and variations of such words and similar expressions identify such forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties that may cause future results to differ materially from those suggested by the forward-looking statements. These risks include, among others, general economic conditions, including changes in interest rates, in the overall level of consumer spending and in the price of oil, cotton and other raw materials used in the Company's products, changing competition, changes in the retail environment, the Company's ability to successfully integrate newly acquired businesses, the level and pricing of future orders from the Company's customers, the extent to which the Company's business is concentrated in a small number of customers, the Company's dependence upon third-party suppliers, including some located in foreign countries, customer acceptance of both new designs and newly-introduced product lines, actions of competitors that may impact the Company's business, disruptions to transportation systems or shipping lanes used by the Company or its suppliers, and the Company's dependence upon licenses from third parties. Reference is also made to the Company's periodic filings with the Securities and Exchange Commission for additional factors that may impact the Company's results of operations and financial condition. The Company does not undertake to update the forward-looking statements contained herein to conform to actual results or changes in our expectations, whether as a result of new information, future events or otherwise. Contact:Craig J. Demarest, Vice President and Chief Financial Officer (225) 647-9118cdemarest@ Investor Relations: Three Part AdvisorsSteven Hooser, Partner, or Matt Hodges, Managing Director(817) 343-8021 CROWN CRAFTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS SELECTED FINANCIAL DATA In thousands, except percentages and per share amounts (Unaudited) Three-Month Periods Ended Fiscal Years Ended March 30, 2025 March 31, 2024 March 30, 2025 March 31, 2024 Net sales $ 23,227 $ 22,579 $ 87,250 $ 87,632 Gross profit 4,244 5,228 21,265 23,000 Gross profit percentage 18.3% 23.2% 24.4% 26.2% Marketing and administrative expenses 4,582 3,916 18,690 16,105 Goodwill impairment charge 13,766 - 13,766 - (Loss) income from operations (14,104) 1,312 (11,191) 6,895 (Loss) income before income tax expense (14,429) 1,156 (12,413) 6,228 Income tax (benefit) expense (3,642) 152 (3,057) 1,334 Net (loss) income (10,787) 1,004 (9,356) 4,894 Basic (loss) earnings per share $ (1.04) $ 0.10 $ (0.90) $ 0.48 Diluted (loss) earnings per share $ (1.04) $ 0.10 $ (0.90) $ 0.48 Weighted Average Shares Outstanding: Basic 10,401 10,245 10,365 10,210 Diluted 10,401 10,253 10,365 10,214 CONSOLIDATED BALANCE SHEETS SELECTED FINANCIAL DATA In thousands March 30, 2025 March 31, 2024 Cash and cash equivalents $ 521 $ 829 Accounts receivable, net of allowances 24,508 22,403 Inventories 27,800 29,709 Total current assets 55,303 54,824 Operating lease right of use assets 12,253 14,949 Finite-lived intangible assets - net 7,050 2,872 Goodwill - 7,926 Total assets $ 81,154 $ 82,706 Current maturities of long-term debt 1,990 - Operating lease liabilities, current 3,987 3,587 Total current liabilities 15,505 10,461 Long-term debt 16,512 8,112 Operating lease liabilities, noncurrent 9,107 12,138 Shareholders' equity 39,619 51,601 Total liabilities and shareholders' equity $ 81,154 $ 82,706 GAAP to Non-GAAP Reconciliation CROWN CRAFTS, INC., AND SUBSIDIARIES NON-GAAP FINANCIAL MEASURES (Unaudited) (amounts in thousands, except per share amounts) Three-Month Periods Ended Fiscal Years Ended March 30, 2025 March 31, 2024 March 30, 2025 March 31, 2024 Net (loss) income (10,787) 1,004 (9,356) 4,894 Adjustment for items: Goodwill impairment charge 13,766 - 13,766 - Tax impact of adjustments(1) (3,408) - (3,408) - Adjusted net (loss) income(2) (429) 1,004 1,002 4,894 Diluted (loss) earnings per share $ (1.04) $ 0.10 $ (0.90) $ 0.48 Adjusted diluted (loss) earnings per share(2) $ (0.04) $ 0.10 $ 0.10 $ 0.48 Diluted weighted Average Shares Outstanding 10,401 10,253 10,365 10,214 (1) The tax impact of adjustments includes the tax effect of the goodwill impairment charge based on the Company's effective tax rate. (2) Adjusted net (loss) income and adjusted diluted (loss) earnings per share, which are non-GAAP measures, are defined as net (loss) income and net (loss) income per share, excluding the impact of impairment charges. Management believes adjusted net (loss) income and adjusted diluted (loss) earnings per share provides useful information to investors because it allows management, investors and others to evaluate and compare the Company's operating results from period to period by removing the impact of impairment charges that are not reflective of our core in to access your portfolio
Yahoo
17-05-2025
- Business
- Yahoo
AppLovin (NasdaqGS:APP) Posts Strong Q1 Earnings with Substantial Year-Over-Year Growth
AppLovin recently experienced a significant share price increase of 58% over the past month, moving distinctly beyond the broader market's 5% increase over the last week. This notable performance came after the company reported strong Q1 earnings, with sales and net income showing substantial year-over-year growth and an increased EPS. The completion of a significant share buyback program also likely added momentum to the stock's rise. However, the company faces challenges with a new securities class action lawsuit and a notable goodwill impairment, both of which might have tempered the overall enthusiasm surrounding its otherwise strong financial performance. We've spotted 3 risks for AppLovin you should be aware of. Trump's oil boom is here — pipelines are primed to profit. Discover the 22 US stocks riding the wave. AppLovin's recent share price surge by 58% over the past month, fueled by robust Q1 earnings and a significant share buyback, signals optimism around its strategic initiatives. However, the accompanying securities class action lawsuit and a notable goodwill impairment may introduce elements of risk that could affect its revenue growth and earnings forecasts. Despite these challenges, analysts foresee substantial revenue growth as the company pivots towards the global advertising market, leveraging AI-driven models for better operational efficiency and increased net margins. The potential short-term impacts may temper enthusiasm around long-term forecasts, considering the company's growth trajectory and market expansion goals. Over the past three years, AppLovin has delivered a total shareholder return exceeding 800%, reflecting a strong upward trajectory. This performance contrasts with its recent outperforming of the US Software industry, which returned 17.3% over the past year. This long-term growth indicates a resilient market position, notwithstanding short-term fluctuations. As the current share price stands at US$304.62, the consensus analyst price target of US$432.90 suggests potential upward movement of approximately 29.6%. This aligns with analysts' expectations of continued robust earnings growth, contingent on the company's successful navigation of associated operational and market risks. Get an in-depth perspective on AppLovin's performance by reading our balance sheet health report here. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include NasdaqGS:APP. This article was originally published by Simply Wall St. Have feedback on this article? Concerned about the content? with us directly. Alternatively, email editorial-team@ Sign in to access your portfolio
