Intelligent Investor: June 8

(RTTNews) - Earnings Intelligence

Online personal styling service provider Stitch Fix Inc. (SFIX) reported a turnaround to profit for the third quarter on higher revenues, led by growing active client count.

The company's third-quarter net income was $9.5 million or $0.09 per share compared to a loss of $9.6 million or $0.38 per share last year.

On a non-GAAP basis, net income totaled $9.5 million or $0.09 per share versus $3.3 million or $0.03 per share in the prior year period.

Net revenue increased to $316.7 million from $245.1 million generated a year ago.

Analysts polled by Thomson Reuters expected the company to earn $2.84 per share on revenue of $627.11 million for the quarter. Analysts' estimates typically exclude certain special items.

The company reported active clients of 2.7 million, an increase of 30% year over year.

Stitch Fix founder and CEO Katrina Lake, said, "We continue to balance growth and profitability, demonstrated by our ability to consistently deliver top-line growth of over 20% even as we invest in category expansions, technology talent, and marketing. Our third quarter results demonstrate continued positive momentum for Stitch Fix and the power of our unique ability to deliver personalized service at scale."

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Home décor superstore At Home Group Inc. (HOME) reported its 16th consecutive quarter of over 20% net sales growth and its 17th consecutive quarter of positive comparable store sales increases, especially in light of a particularly wet and cold spring selling season.

Net income was $18.4 million compared to $10.0 million in the first quarter of fiscal 2018. EPS was $0.28 compared to $0.16 in the first quarter of fiscal 2018.

Pro forma adjusted net income grew 68.1% to $20.1 million from $12.0 million in the first quarter of fiscal 2018. Pro forma adjusted EPS grew 63.2% to $0.31 from $0.19 in the first quarter of fiscal 2018.

Analysts polled by Thomson Reuters expected earnings of $0.27 per share for the quarter. Analysts' estimates typically exclude certain special items.

Net sales increased 20.9% to $256.2 million from $211.8 million in the quarter ended April 29, 2017 driven by the net addition of 27 stores since the first quarter of fiscal 2018 and a comparable store sales increase of 0.9%.

FY19 Guidance

The company reaffirmed its top-line expectations and raised its profitability outlook for fiscal 2019.

The company still projects fiscal 2019 net sales of $1.154 billion - $1.161 billion, representing annual growth of 21% - 22%, based on 34 gross and 31 net new store openings and an assumed comparable store sales increase of 2.5% - 3.5%, which would represent a 9.0% - 10.0% increase on a two-year comparable store sales basis.

Net income for 2019 is currently expected to be in the range of $54.2 million - $57.2 million, or $0.82 - $0.87 per share, and pro-forma adjusted net income of $82.5 million - $85.5 million, or $1.25 - $1.30 per share.

Analysts are looking for earnings of $1.26 per share and revenue of $1.19 billion for the year 2019.

Q2 Outlook

The company expects second-quarter net sales of $284 million - $287 million based on 11 gross and 10 net new store openings and an assumed comparable store sales increase of 2.5% - 3.0%, which would represent a 10.3% - 10.8% increase on a two-year comparable store sales basis.

At Home Group expects to report a loss of $4.6 million - $5.6 million, or $0.07 - $0.08 loss per share, and proforma adjusted net income of $20.8 million - $21.8 million, or $0.32 - $0.33 per share.

Wall Street analysts expect earnings of $0.29 per share and revenue of $284.42 million for the quarter.

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Semiconductor company Broadcom Inc. (AVGO) reported upbeat profit for the second quarter.

The company's earnings totaled $3.72 billion, or $8.33 per share. This compares with $0.44 billion, or $1.05 per share, in last year's second quarter.

Excluding items, Broadcom reported adjusted earnings of $2.24 billion or $4.88 per share for the period.

Analysts polled by Thomson Reuters expected earnings of $4.76 per share for the quarter. Analysts' estimates typically exclude certain special items.

Revenue for the quarter rose 19.6% to $5.01 billion from $4.19 billion last year.

"Our business continues to be very robust and sustainable. This is validated through our strong execution in the second quarter which drove gross margin to a record 66.6 percent and free cash flow to 42.3 percent of net revenue," said Hock Tan, President and CEO of Broadcom.

For the third quarter, the company still expects non-GAAP net revenue of $5.05 billion, plus or minus $75 mln, while Wall Street analysts expect revenue of $5.06 billion.

The company's Board approved a quarterly cash dividend of $1.75 per share, payable on June 29, 2018 to stockholders of record on June 20, 2018.

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