Formerly known as Liberty Interactive Corporation, e-commerce service provider Qurate Retail, Inc. (QRTEA) closed Friday’s trading session at $12.42, 9.7% below its 52-week high of $13.76. With a focus on gaining new customers and retaining existing ones through new programs and the introduction of  new brands, the company reported impressive performance across its seven leading retail brands — QVC, HSN, Zulily, Ballard Designs, Frontgate, Garnet Hill, and Grandin Road.

QRTEA has gained 92.3% over the past year and 13.2% year-to-date. Increased demand for home products because of people spending more time amid the COVID-19 pandemic—which has begotten a boom in home shopping–has been a key driver of the company’s performance.

In addition, QRTEA has declared a quarterly cash dividend of $2.00 per share of 8.0% Series A Cumulative Redeemable Preferred Stock, payable in cash on March 15, 2021.

Click here to checkout our Retail Industry Report for 2021

Here’s what could shape QRTEA’s performance in 2021:

Impressive Historical Growth

QRTEA’s revenues have increased at a CAGR of 10.9% over the past three years. Also, the company’s EPS and EBITDA increased at CAGRs of 19.1% and 7.2%, respectively, over the same period.

Unique Offerings and Expansion of Market Reach

QRTEA’s QVC US and HSN brands are expected to introduce more than 90 emerging brands in apparel, accessories, beauty, culinary, home décor and innovations, and electronics this year. QVC and HSN discovered the brands through ‘The Big Find’,  retailers’ second annual international search to discover entrepreneurs with the next big brand or unique product. Also, Curtis Stone’s show “Travel, Cook, Repeat with Curtis Stone” was launched exclusively  on the QVC/HSN streaming service on October 13, 2020.

QVC debuted on YouTube TV on January 26, with more than three million subscribers and became the only livestream shopping channel on YouTube TV. Moreover, HSN launched the first ever Discovery Days — a 10 day-long event across all platforms, including on-air and digital, offering both national and private label brands at up to 30% off — on February 19.

Top-Line Growth Across all Business Segments

The company’s top line climbed 6.7% year-over-year to $4.45 billion for the fourth quarter ended December 31. It was driven primarily  by  strong demand for home products, growth in customers and strong demand in its home brands, including Frontgate, Ballard Designs, and Grandin Road. Revenue from its QxH segment increased 37.5% sequentially, while revenue from its QVC International segment increased 15.6% year-over-year. Revenue from its Zulily segment increased 11.3% and its  Cornerstone segment increased 30.3% year-over-year.

The  company’s adjusted EPS of $1.59 increased 133.8% year-over-year. QRTEA has surpassed  consensus EPS estimates in three of the trailing four quarters.

Inexpensive Valuation

In terms of non-GAAP forward price/earnings, QRTEA is currently trading at 6.07x, 66.4% lower than the industry average 18.06x. In terms of forward enterprise value/sales, the stock’s 0.90x is lower than the industry average  1.59x. The stock’s forward price/sales of 0.37x is also 71.5% lower than the industry average of 1.30x.

Wall Street analysts expect the stock to hit $14 in the near term, which indicates a potential upside of 11.2%.

POWR Ratings Indicate Solid Upside

QRTEA has an overall rating of A which equates to Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. QRTEA has an A  grade  for Value consistent with the stock’s lower-than-industry valuation ratios.

The stock has a B grade for Momentum, which is in sync with the stock’s impressive gains over the past few months. The stock has gained 16.4% over the past six months and 7.2% over the past three months.

We have also graded QRTEA for Stability, Sentiment, Growth and Quality. Get all QRTEA’s ratings here.

QRTEA is ranked #5 of 44 stocks in the Internet – Services industry.

Click here to access 11 other top-rated stocks in the same industry.

Bottom Line

QRTEA has generated impressive returns over the past months, leveraging its unique business model. We think it is wise to add the stock to one’s  portfolio now because  it is trading at a discount and can generate healthy returns in the coming months based on its widening market reach.

Click here to checkout our Retail Industry Report for 2021

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QRTEA shares were trading at $12.31 per share on Monday morning, down $0.11 (-0.89%). Year-to-date, QRTEA has gained 12.22%, versus a 3.37% rise in the benchmark S&P 500 index during the same period.

About the Author: Manisha Chatterjee

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...

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