The Lovesac Co. ($LOVE) Earnings (Q2 FY23)

 The Lovesac Co. ($LOVE) Earnings and Opinion:


The Lovesac Co. is a company in the Consumer Cyclical sector and operates in the Furnishings, Fixtures, and Appliances industry. The company designs, manufactures, and sells furniture. The Lovesac Co. was founded in 1995 and is currently headquartered in Stamford, Connecticut. The company started trading on the stock market in 2018.

The Lovesac Co. Earnings Results:

  • Revenues of $149M beating expectations of $130M
  • Gross Profit of $81M beating expectations of $66M
  • Adjusted EBITDA of $14M beating expectations of $11M
  • Adjusted EPS of $0.45 beating expectations of $0.39
  • Inventories of 147M beating expectations of 87M
Opinion:
The Lovesac Co. is currently failing to find direction, after reporting earnings before the opening of the market this morning. The company is currently trading lower, but that is weird because they beat on every single metric on the earnings report. I think the main reason for the downturn has to be due to the overload of inventory. The company has a lot of product in stock, which is a bit worry-some. It could mean that they are not effectively selling products at the rates they should, or it could mean that they bought too much to fulfill demand. I think overall, the current quarter looks solid, but the guide of GM dropping 300bps is something to watch out for. As far as valuation goes, The P/E ratio sits at 9.11 and the P/S ratio is at 0.76, which are both comfortable positions. The growth outlook seems to be on a downward trend. The current ratio is at 2.02, which is also at a comfortable level. Also, the cash is outweighed by the debt by about $60M. In my opinion, this company doesn't seem too bad. I am personally not too intrigued by what they have to offer. I do think there’s some upside to go with it though. If they can make their inventory more productive and also work on making profitability more sustainable, this company would be a killer. I love the products they have to offer, I just think I will pass on this one for now though.


*Information from Yahoo Finance, CMLVIZ, Consensus Gurus

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