WEBR – Grilled to Perfection

Copper is essential for electrical devices like EVs, and, with the government’s push for green energy, the need for copper has never been greater. Suddenly, copper is finding a place next to other precious metals. As demand grows, copper will be harder to find, and prices could soar. Several companies have entered the competition, but one company, Alpha Copper, is poised to meet the extra copper demand with deposits of over 58 million tons. See how Investors can take advantage of the copper rush.

Learn more

Weber (WEBR) has recently gotten a lot of buzz among traders because of its high-short interest. Yahoo Finance reports that approximately 40% of the float is short. 

With the market bouncing back, so have traders’ risk appetites. And with the recent short-squeeze in Bed Bath and Beyond (BBBY), they are on the hunt for more potential squeeze plays. 

And that’s why WEBR shot up on April 18 by 27%.

That sent stock searches for the girll master through the roof, taking it from less than a dozen monthly looks to 361 in the last 30 days, putting it at #1 amongst financial pros looking into home furnishings and appliances.

But is WEBR just a short-squeeze play, or is it a stock investors’ can get behind and hold for the long term?

Check out what we think below… 

Invest in the Future of Housing (Ad)

Imagine if houses were built like cars, with one home coming off the assembly line every minute… wouldn’t that change the world? Well, cutting-edge housing manufacturer Boxabl plans to do just that by setting up the world’s largest and most advanced housing factory.

Click here to know more

Weber’s Business 

Weber Inc., (WEBR) makes outdoor cooking products, accessories, consumables, and services. Its products are sold through an omnichannel network of wholesale, direct-to-consumer, and e-commerce. 

WEBR is the #1 brand and the global category leader in outdoor cooking. The firm has more than 50 million customers across 78 countries. It generates a majority of its revenues, 75%, from the sale of outdoor grills. WEBR has a 24% share of the outdoor grill market with 55% of its business from the Americas.

The company’s products can be found at major retailers like The Home Depot, Walmart, Costco, Lowe’s, True Value, and Ace Hardware, as well as through its website, Weber stores, and online retailers like Amazon and Wayfair. 

Last year 80% of its sales came from major retailers, while 7% came from direct-to-consumers and 13% from e-commerce.

Financials

During the last quarter, Weber’s net sales decreased by 21%, to $528 million, from $669 million in the prior-year quarter as consumers exited lockdowns and began to venture out into the world.

The firm experienced strong growth from 2019 to 2021, as revenues went from $1.29 billion to $1.98 billion driven by lockdowns and stay at home orders. However, its 12-month trailing revenue is $1.78 billion. And is unlikely it will beat 2021’s record revenue numbers. 

The firm stated that inflation, supply chain disruptions, fuel prices, and a slow-down in demand are weighing down on its business. 

The company’s operating cash flow (ttm) is -$263 million. But the firm is putting together a plan which it believes can save them at least $110 million in the fiscal year 2023. Included in that plan, is a suspension of its quarterly dividend. 

Before its Q2 FY2023 quarterly earnings announcement, WEBR had total debt of $1.4 billion, and $52.7 million in cash, while sporting a market cap of $2.26 billion. 

Valuation

The firm experienced a net loss of $52 million compared to a net income of $18 million in the prior-year quarter. Furthermore, its adjusted EBITDA of $11 million was significantly worse than the prior year’s quarter, at $134 million. 

Furthermore, its gross profit dropped from $299 million in FYQ3 2021 to $154 million in FYQ3 2022.

However, it’s not all doom and gloom for WEBR. It has an attractive price-to-sales ratio of 0.23x. 

Profitability

Profitability is something that currently eludes WEBR. Despite a gross profit margin of 30.13%, the firm has a negative EBITA margin, net income margin, return on equity, and return on total capital. But as mentioned earlier, the firm has a restructuring plan in place it believes can save it $110m+ in the fiscal year 2023. 

Growth

The firm has experienced a slowdown in revenue growth of -11.58% (YoY).  However, it has experienced a 6% CAGR from FYQ3 2019 to FYQ3 2022. Moreover, since 1980, it has experienced approximately 10% revenue CAGR. 

Our Opinion 8/10

Weber has recently gotten attention from traders because of its high-short interest. Buying shares of heavily shorted stocks in hopes of producing a short squeeze is a very profitable strategy. 

However, unlike some short-squeeze stock plays, WEBR is a legitimate company with a rich history. It’s also the category leader in its space. And while Q3 was not a great one for the firm, we believe it has created a buying opportunity. And with its current restructuring plan in place, we think this will be a great stock to own for many years.