04-30-2021, 04:56 AM
DD: Mother's Day is May 9th - Go Get Her Some Nice $FLWS
<!-- SC_OFF --><div class="md"><p>1-800-FLOWERS, or FLWS, just smashed their 3rd quarter earnings, so I wanted to write up a bit of due diligence on the company. In spirit of today's DD, here's: <a href="https://cdn.shopify.com/s/files/1/0564/6755/4489/files/TULIPScolorSHOP.jpg?v=1619009285">a piece of digital art representing the Tulip bubble of the 1600's</a>. </p> <p><strong>Intro:</strong> If you're unaware of 1-800-FLOWERS than you probably live in a cave where no sun shines and it's cold and lifeless, but I'll give you a pass because you probably also believe it's an over-the-phone floral delivery service. Good news, it's not. 1-800-FLOWERS is a leading e-commerce provider of products and services designed to inspire more human expression, connection, and celebration which today reported results for its Fiscal 2021 third quarter ended March 28, 2021. This colorful description comes from the marketing department so to give a better idea, it operates in three segments: Consumer Floral; Gourmet Foods & Gift Baskets; and BloomNet. The company offers a range of products, including fresh-cut flowers, floral and fruit arrangements and plants, gifts, dipped berries, popcorn, gourmet foods and gift baskets, cookies, chocolates, candies, wine, and gift-quality fruits, as well as balloons, candles, keepsake gifts, jewelry, and plush stuffed animals. Alright, that's enough- use Google if you want to know more of the basics.</p> <p><strong>Note:</strong> This is a <em>cyclical</em> business. If it wasn't clear to you already, I'm going to state now that their quarterly results vary based on the celebrated holidays within their time frame. For example, in the year 2020, the quarters that ended in March & September had roughly the same amount of Net Revenue but the quarter that ended in June had 1.5 times that amount. The Holiday season quarter ending in December <em>more than doubled</em> that very same quarter ending in June.</p> <p><strong>Metrics:</strong></p> <ol> <li> ROIC, as of today for the TTM, is 19.66%. Over the last 5 years, starting at 8.11%, FLWS ROIC has steadily increased and is now more than twice it was only 5 years ago. (GuruFocus.com) ROA & ROE are both also currently greater than 10%, but I'm not usually as focused on those metrics. (Finviz.com)</li> <li>Institutional Ownership is 88%. In previous posts of mine, I've mentioned that I like seeing high enough IO to inspire confidence from the big guys, but a margin large enough to allow more big guys to come in and drive the price up with bulk buying. 88% is a great spot for Institutional Ownership. (Finviz.com)</li> <li>D/E, as of prior to this most recent earnings report, is .34. I hate seeing debt, whether it be short or long term but the upside here is that FLWS has proven how to <em>make lending work for them.</em> At any rate, they are far from their own worst enemy, but here's the hot button topic that everyone is talking about: FLWS has a 27% Short ratio. As far as I'm concerned, this is <em>way</em> too high for such a strong business, but it's more important to note that this ratio is very likely based on cyclical, quarterly moves in the stock price. In my opinion, this is a risky, but fair short term trading strategy for a cyclical business like this. I believe, based on these fundamentals, that there's way too much risk betting against FLWS, even quarterly, but Hedgies gonna Hedge. (Finviz.com)</li> <li>PEG Ratio was at .8 at market close yesterday for the next 5 years. For the <em>last</em> 5 years, EPS grew 24% <em>without</em> emphasis on their ecommerce business. This is with a P/E ratio of only 15, I mind you. With today's quarterly report, this is only going to get stronger. If you need me to spell this out, I will- their margins are only going to get stronger from here on out AND they're still undervalued. (Finviz.com)</li> <li>Operating Cash Flow doubled from 2019 to 2020 and then <em>more than doubled</em> from 2020 to the TTM. (Yahoo Finance)</li> <li>As of this morning, FLWS raised their share buyback program to $40 million. This management team knows what they're doing. They're taking full advantage of the shorting a cyclical business by purchasing their own shares when <em>they know</em> the price will be undervalued. All of this value comes right back to the shareholders for free. </li> </ol> <p><strong>Bear Case:</strong> No company is perfect, so it's important for me to poke holes in any potential investment I'm considering. The bear case for 1-800-FLOWERS is consumer-centric. My research talking to people about the service and products have largely revolved around the same issue: Flower quality. Despite FLWS offering many different products and services, it appears that most people I have spoken to have felt somewhat disappointed by the flowers that have been delivered. In my own personal opinion when I have used the site for flower delivery, I did not experience the same- but again, that's just my own opinion. There were plenty of positive comments made about other offerings, but consumer sentiment is a piece of the puzzle when considering supporting a company, so I've taken this into account and will continue to monitor any changes.</p> <p><strong>Subjective Analysis:</strong> I think FLWS has what it takes to really bloom (sorry, I had to). A track record of a strong financial foundation, growth on the horizon by way of their Bloomnet and focus on their Ecommerce presence, and the ability to do all this with great margins and leadership team that <em>wants</em> shareholders to succeed. </p> <p><em>Disclaimer, because apparently that's a thing now: The above is not advice, just an analysis meant for educational purposes.</em></p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/F1rstxLas7"> /u/F1rstxLas7 </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/n133p8/dd_mothers_day_is_may_9th_go_get_her_some_nice/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/n133p8/dd_mothers_day_is_may_9th_go_get_her_some_nice/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p>1-800-FLOWERS, or FLWS, just smashed their 3rd quarter earnings, so I wanted to write up a bit of due diligence on the company. In spirit of today's DD, here's: <a href="https://cdn.shopify.com/s/files/1/0564/6755/4489/files/TULIPScolorSHOP.jpg?v=1619009285">a piece of digital art representing the Tulip bubble of the 1600's</a>. </p> <p><strong>Intro:</strong> If you're unaware of 1-800-FLOWERS than you probably live in a cave where no sun shines and it's cold and lifeless, but I'll give you a pass because you probably also believe it's an over-the-phone floral delivery service. Good news, it's not. 1-800-FLOWERS is a leading e-commerce provider of products and services designed to inspire more human expression, connection, and celebration which today reported results for its Fiscal 2021 third quarter ended March 28, 2021. This colorful description comes from the marketing department so to give a better idea, it operates in three segments: Consumer Floral; Gourmet Foods & Gift Baskets; and BloomNet. The company offers a range of products, including fresh-cut flowers, floral and fruit arrangements and plants, gifts, dipped berries, popcorn, gourmet foods and gift baskets, cookies, chocolates, candies, wine, and gift-quality fruits, as well as balloons, candles, keepsake gifts, jewelry, and plush stuffed animals. Alright, that's enough- use Google if you want to know more of the basics.</p> <p><strong>Note:</strong> This is a <em>cyclical</em> business. If it wasn't clear to you already, I'm going to state now that their quarterly results vary based on the celebrated holidays within their time frame. For example, in the year 2020, the quarters that ended in March & September had roughly the same amount of Net Revenue but the quarter that ended in June had 1.5 times that amount. The Holiday season quarter ending in December <em>more than doubled</em> that very same quarter ending in June.</p> <p><strong>Metrics:</strong></p> <ol> <li> ROIC, as of today for the TTM, is 19.66%. Over the last 5 years, starting at 8.11%, FLWS ROIC has steadily increased and is now more than twice it was only 5 years ago. (GuruFocus.com) ROA & ROE are both also currently greater than 10%, but I'm not usually as focused on those metrics. (Finviz.com)</li> <li>Institutional Ownership is 88%. In previous posts of mine, I've mentioned that I like seeing high enough IO to inspire confidence from the big guys, but a margin large enough to allow more big guys to come in and drive the price up with bulk buying. 88% is a great spot for Institutional Ownership. (Finviz.com)</li> <li>D/E, as of prior to this most recent earnings report, is .34. I hate seeing debt, whether it be short or long term but the upside here is that FLWS has proven how to <em>make lending work for them.</em> At any rate, they are far from their own worst enemy, but here's the hot button topic that everyone is talking about: FLWS has a 27% Short ratio. As far as I'm concerned, this is <em>way</em> too high for such a strong business, but it's more important to note that this ratio is very likely based on cyclical, quarterly moves in the stock price. In my opinion, this is a risky, but fair short term trading strategy for a cyclical business like this. I believe, based on these fundamentals, that there's way too much risk betting against FLWS, even quarterly, but Hedgies gonna Hedge. (Finviz.com)</li> <li>PEG Ratio was at .8 at market close yesterday for the next 5 years. For the <em>last</em> 5 years, EPS grew 24% <em>without</em> emphasis on their ecommerce business. This is with a P/E ratio of only 15, I mind you. With today's quarterly report, this is only going to get stronger. If you need me to spell this out, I will- their margins are only going to get stronger from here on out AND they're still undervalued. (Finviz.com)</li> <li>Operating Cash Flow doubled from 2019 to 2020 and then <em>more than doubled</em> from 2020 to the TTM. (Yahoo Finance)</li> <li>As of this morning, FLWS raised their share buyback program to $40 million. This management team knows what they're doing. They're taking full advantage of the shorting a cyclical business by purchasing their own shares when <em>they know</em> the price will be undervalued. All of this value comes right back to the shareholders for free. </li> </ol> <p><strong>Bear Case:</strong> No company is perfect, so it's important for me to poke holes in any potential investment I'm considering. The bear case for 1-800-FLOWERS is consumer-centric. My research talking to people about the service and products have largely revolved around the same issue: Flower quality. Despite FLWS offering many different products and services, it appears that most people I have spoken to have felt somewhat disappointed by the flowers that have been delivered. In my own personal opinion when I have used the site for flower delivery, I did not experience the same- but again, that's just my own opinion. There were plenty of positive comments made about other offerings, but consumer sentiment is a piece of the puzzle when considering supporting a company, so I've taken this into account and will continue to monitor any changes.</p> <p><strong>Subjective Analysis:</strong> I think FLWS has what it takes to really bloom (sorry, I had to). A track record of a strong financial foundation, growth on the horizon by way of their Bloomnet and focus on their Ecommerce presence, and the ability to do all this with great margins and leadership team that <em>wants</em> shareholders to succeed. </p> <p><em>Disclaimer, because apparently that's a thing now: The above is not advice, just an analysis meant for educational purposes.</em></p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/F1rstxLas7"> /u/F1rstxLas7 </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/n133p8/dd_mothers_day_is_may_9th_go_get_her_some_nice/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/n133p8/dd_mothers_day_is_may_9th_go_get_her_some_nice/">[comments]</a></span>Kind Regards R