EVINE Live: Zacks’ Bear of the Day Play

Earnings estimates have been falling for EVINE Live (EVLVSnapshot Report) after the company reported disappointing first quarter results on May 20. The drop in consensus has been significant enough to send the stock to a Zacks Rank #5 (Strong Sell), putting it in the bottom 5% of all companies we rank based on earnings momentum.

And while shares of EVINE Live sold off heavily after the report, the stock still doesn’t look like a value at 37x forward earnings.

EVINE Live is a digital commerce company that sells products to customers through TV, online, mobile and social media. The company operates a 24-hour shopping network, EVINE Live, which is distributed primarily on cable and satellite television.

In November of last year, the company changed its name from ValueVision Media, Inc. to EVINE Live Inc. It is headquartered in Eden Prairie, Minnesota and has a market of $206 million.

First Quarter Results

EVINE Live reported its first quarter results on May 20. Adjusted earnings per share came in at -$0.04, well below the consensus of +$0.02. It was also down from adjusted EPS of +$0.03 in the same quarter last year.

Net sales declined 1% to $158.5 million, which was also below the consensus of $165 million. This was driven in large part by a 14% decrease in the average selling price, particularly in Watches.

The gross profit margin also declined from 37.6% of net sales to 36.2%. This was due in part to discounting excess textiles inventory on-air.

Estimates Falling

Following the Q1 miss, analysts unanimously revised their estimates lower for both 2015 and 2016. This sent EVINE Live to a Zacks Rank #5 (Strong Sell).

The 2015 Zacks Consensus Estimate is now just $0.02, down from $0.24 before the report. The 2016 consensus has fallen from $0.46 to $0.27 over the same period.

Lofty Valuation

Shares of EVLV have fallen sharply since the Q1 report, but it doesn’t look like a value here. The stock trades at a lofty 37x 12-month forward estimates. Additionally, the company generated negative operating cash flow in fiscal 2014.

The Zacks Value Style Score for EVINE Live is a ‘D’.

The Bottom Line

With falling estimates and premium valuation, investors should consider avoiding EVINE Live for now.

Todd Bunton, CFA is a Stock Strategist for Zacks Investment Research and Editor of the Income Plus Investor and Surprise Trader services.

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