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1-800-Flowers is scheduled to report their fiscal first quarter
2009 results before the market opens on Thursday, October 23.
Based on our analysis, we at
eChristianInvesting are expecting FLWS to report inline
results that meet Wall Street’s consensus expectations.
Analyst
Expectations
We are
forecasting revenues of $150.0 million and EPS of ($.11). This
would represent a 3% increase in revenues from last year’s
$145.8 million in the same period. The current analyst consensus
calls for revenues of $150.0 million and ($.11) EPS. On August
7, the company gave full year guidance for revenue growth of 10%
and EPS growth of 20%.
The fiscal
first quarter is traditionally the weakest quarter accounting
for only 14-16% of full year revenues. However, our checks show
that traffic dropped dramatically over the summer months. With
the combination of a seasonally slow quarter along with strong
macroeconomic headwinds, we believe that merely meeting
analyst’s conservative estimates will be considered a win.
Share
Performance
To date,
1-800-Flowers shares are down 44%. Investors have fled the stock
all year as difficult economic conditions are expected to weigh
heavily on the company’s performance. To date, FLWS has
underperformed the S&P 500’s 33% loss.
Valuation
Shares are
now trading at a reasonable 11x consensus 2009 EPS estimates.
This is below the relative valuations of their peer group.
However, we believe the company will be hit very hard by the
reduction in consumer spending and anticipate the company will
need to reduce guidance as the likelihood of achieving
double-digit growth in this environment is practically nil.
Recommendation:
Hold with a $5 price target.
At the time this article was published, the author did not have
a financial position in any of the stocks mentioned in this
article.
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