Tag Archives: NYSE:TCS

Container Store: Zacks’ Bull of the Day Play

The Container Store (TCSFree Report) is a retailer that opened 10 new stores in 2015 but pulled back on new openings for 2016. The company is also looking at smaller square foot stores in 2017. Investors like to see growing stores and growing store size to drive sales ever higher, but this stock was able to post an excellent beat and raise quarter. TCS is Zacks Rank #1 (Strong Buy) and is Bull of the Day.

Why I Like It

This is a small-cap stock, and small caps have been running lately.

A good recent earnings history when compared to the Zacks Consensus Estimate.

Recent jump higher in earnings estimates.

The company posted a beat and raise quarter on November 9.

Follow Brian Bolan on twitter at @BBolan1 and on StockTwits at the same address.

The Recent Numbers

I like to do a review of the most recent quarter for stocks that I highlight as Bulls of the Day. TCS reported the September 2016 quarter on November 9 and beat on the bottom then guided higher.

The company posted EPS of $0.07 when the Zacks Consensus Estimate was calling for $0.04. Revenue came in $1M below expectations for a 0.7% negative revenue surprise. As a result, the stock was bid up by more than 4.3% in the session following the report.

The company issued guidance for EPS of $0.20-$0.30 when the Zacks Consensus Estimate was calling for $0.23. At the time, the Wall Street estimate was calling for $0.19.

Description

The Container Store is a retailer of storage and organization products in the United States. As of May 9, 2016, it operated 79 store locations with an average of 25,000 square feet each. The Container Store was founded in 1978 and is headquartered in Coppell, Texas.

Earnings History

The company has a good history of beating the Zacks Consensus Estimate. There have been two miss in the last two years.

CONTAINER STORE Price and EPS Surprise

CONTAINER STORE Price and EPS Surprise | CONTAINER STORE Quote

Estimates

The estimate picture looks really good, with the Zacks Consensus Estimate for FY17 moving from $0.23 in October to $0.27 in November. The estimate for FY18 moved from $0.25 to $0.33 over the same time.

CONTAINER STORE 12 Month EPS

CONTAINER STORE 12 Month EPS | CONTAINER STORE Quote

Valuation

The valuation for TCS is one that I really like to see. The forward PE of 22x is well below the industry average of 27x. The company trades below the industry average for price to book (1.4x compared to 4.2x) and price to sales (0.4x compared to 3x).

Chart

Zacks has developed a chart that helps investors see how earnings estimates have impacted the price of the stock over the last several years. We call this chart the price and consensus chart, and each color-coded line represents analyst estimates over a designated year. As estimates increase, the stock tends to follow. The Zacks Rank is impacted by earnings estimate increases, beats and incorporates the idea of analyst agreement and magnitude. As a Zacks Rank #1 (Strong Buy) we see that estimates are moving higher.

CONTAINER STORE Price, Consensus and EPS Surprise

CONTAINER STORE Price, Consensus and EPS Surprise | CONTAINER STORE Quote

Confidential from Zacks

This week, Zacks researchers have named 7 other stocks that look to break out even sooner than today’s Bull of the Day. You can see these time-sensitive tickers free, and access additional trades that are not available to the public. Simply click here >> (https://www.zacks.com/registration/confidential/welcome/eoffer/2fe 7/?adid=ZCOM_ZC_BULLOFDAY_7BEST_112916&icid=EOAC- BullArticleCampaign-tx-ZC01-112916).

Follow Brian Bolan on twitter at @BBolan1

In-Depth Zacks Research for the Tickers Above

CONTAINER STORE (TCS) – FREE report >>

Advertisements

The Container Store: Zacks’ Bear of the Day Play

Earnings estimates have fallen sharply for The Container Store (TCSSnapshot Report) following disappointing Q4 results. The decline in consensus estimates for both this year and next have been significant enough to send the stock to a Zacks Rank #5 (Strong Sell).

Additionally, shares of The Container Store don’t exactly look attractively priced here with a Zacks Value Style Score of ‘D’.

The Container Store is a specialty retailer focused on storage and organization products. It has 70 stores across the U.S.

Fourth Quarter Results

The Container Store reported its fourth quarter results on April 27. Adjusted earnings per share came in at $0.24, missing the Zacks Consensus Estimate of $0.31.

Net sales rose 3% year-over-year to $224.3 million, missing the consensus of $233.0 million. Same-store sales slid 0.8%. The company blamed bad weather for the soft revenue (although weather was also bad in the same quarter last year). The company also blamed foreign currency headwinds for weakness in its Elfa subsidiary.

Gross profit as a percentage of net sales declined 40 basis points to 57.8%.

Weak Guidance, Lower Estimates

Following disappointing Q4 results, management provided guidance for fiscal 2015, citing it as an “investment year”. The company expects same-stores in the range of -2% to 0% and adjusted EPS of $0.30-$0.38. This was well below consensus at the time and prompted analysts to unanimously revise their estimates significantly lower for both this year and next.

This sent the stock to a Zacks Rank #5 (Strong Sell).

As you can see, the 2015 Zacks Consensus Estimate has fallen from $0.56 before the Q4 report to $0.32, and the 2016 consensus has dropped from $0.73 to $0.52 over the same period.

That clearly is not a favorable trend.

Lofty Valuation

Shares of The Container Store have sold off since the Q4 report but do not look like much of a value here. In fact, the Zacks Style Score grades TCS a ‘D’ for Value. It’s easy to see why. Shares trade at a frothy 48x 12-month forward earnings, and its enterprise value to operating income ratio is a lofty 27x.

The Bottom Line

With negative earnings momentum and premium valuation, investors should consider looking elsewhere for now.

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

Container Store: Zacks’ Bear of the Day Play

Container Store Group (TCSSnapshot Report) is down about 50% YTD, but stock performance is not a factor of the Zacks Rank. Earnings estimates are a big factor so let’s take a look at why it is a Zacks Rank #5 (Strong Sell), and it is the Bear of the Day.

Company Description

 

The Container Store Group is engaged in the retailing of storage and organization products in the United States. As of March 1, 2014, it operated 63 stores with an average size of approximately 19,000 selling square feet in 22 states and the District of Columbia. The company was founded in 1978 and is headquartered in Coppell, Texas.

Estimates Slide

The Zacks Rank is based on the revisions of earnings estimates. The stock price has nothing to do with the Zacks Rank. When estimates fall, the Zacks Rank will usually fall as well.

TCS has had a poor earnings history as the company has missed in three of the last four quarters.

The Zacks Consensus Estimate has fallen from $0.64 in April to $0.57 in June and down to $0.50 before the most recent earnings release in October. Seeing as it was the third time in the last six months that the company lowered guidance, the estimates were slashed down to their current level of $0.42.

The Zacks Consensus Estimate for 2015 has seen a similar decrease, moving from a high of $0.82 to a low of $0.60 but recently kicked higher by a penny.

Valuation

 

TCS still has some decent growth prospects, despite the company lowering guidance three times in the last six months. The company is expecting 7.5% revenue growth for fiscal 2015 and 11% for fiscal 2016, while the industry average is expected to contract in 2015 by 5.7% and then grow by 4.7% in 2016. That said the 247x trailing PE for TCS show an almost absurd premium to the 20x trailing PE for the industry average. The forward PE, which is more important for a stock like this, shows a healthy premium at 52x compared to 20x for the industry average. Price to book comes in at 5.5x compared to the industry average of 3.3x while price to sales of just 1.4x is below that of the industry average of 2.6x.

The Chart

The price and consensus chart is a very helpful tool developed by Zacks. It shows how the earnings estimates help guide the stock, so as estimates move higher, the stock price generally follows along. TCS as a Zacks Rank #5 (Strong Sell) is no exception to that idea. Investors would be wise to wait for estimates to turn around and start moving higher before they think about investing in this stock.

Follow Brian Bolan on twitter at @BBolan1

Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor in charge of the Zacks Home Run Investor service, a Buy and Hold service where he recommends the stocks in the portfolio.