Shares of renowned grill companies Weber Inc. (WEBR) and Traeger, Inc. (COOK) surged nearly 15% and 14%, respectively, last week. Investors’ short-squeeze hopes primarily drove WEBR shares higher. According to financial data analytics firm S3 Partners, WEB’s short interest stands at 58.91% of the total float. COOK moved up on heavy investor interest too.
However, persistent supply chain concerns amid strong demand have hindered the growth of these companies. The difficulties associated with cargo ships, workforce shortages and constraints, limited storage capacity, and supply and demand mismatches have contributed to the supply bottleneck.
WEBR and COOK lowered their outlook for the coming quarters citing lower sales, inflation, and tighter margins. Therefore, we think these stocks are best avoided now.
Weber Inc. (WEBR)
WEBR is an outdoor cooking company that manufactures and distributes outdoor cooking products, accessories, consumables, and services in North America, Europe, Australia, and internationally. Its products include charcoal and gas grills, smokers, pellet and electric grills, Weber Connect Smart Grilling Hub; and accessories, consumables, and services.
During the second quarter ending March 31, 2022, WEBR’s net sales declined 7.2% year-over-year to $607.29 million. Its income from operations decreased 61.8% from its year-ago value to $37.41 million, while its net loss amounted to $54.45 million compared to a net income of $68.91 million in the prior period. The company’s loss per share stood at $1.02.
Analysts expect WEBR’s revenue to decline 20.4% year-over-year to $532.74 million for the third quarter ending June 2022. The consensus EPS estimate is expected to decline in the third quarter ending June 2022. The stock has gained 32.4% over the past month. However, the company’s shares have plunged 26.1% year-to-date and 38% over the past nine months.
WEBR’s POWR Ratings are consistent with this bleak outlook. The stock has an overall rating of D, which translates to Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
WEBR has rated an F grade for Sentiment and a D grade for Quality and Stability. Within the C-rated Home Improvement & Goods industry, it is ranked #58 of 63 stocks.
To see additional POWR Ratings for Growth, Value, and Momentum for WEBR, click here.
Traeger, Inc. (COOK)
Headquartered in Salt Lake City, Utah, COOK designs, sources, sells, and supports wood pellet-fueled barbeque grills for retailers, distributors, and direct to consumers in the United States. Its wood pellet grills are internet of things devices that enables owners to program, monitor, and control their grill through its Traeger app.
During the first quarter ending March 31, 2022, COOK’s revenue declined 5 % year-over-year to $223.71 million. Its loss from operations came in at $2.99 million, compared to income from operations of $47.92 million in the previous period. Its net loss amounted to $8.43 million compared to a net income of $38.93 million in the prior period. The company’s loss per share stood at $0.07 compared to an EPS of $0.36.
The consensus EPS estimate is expected to decline in the second quarter ending June 2022. The company’s shares have surged 11.6% over the past month. However, the stock has declined 57.2% year-to-date and 77.1% over the past nine months.
COOK’s weak fundamentals are reflected in its POWR Ratings. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system. The stock also has an F grade for Value and Quality and a D for Stability. In the Home Improvement & Goods industry, it is ranked 61 of 63 stocks.
In addition to the POWR Ratings grades I have just highlighted, you can see the COOK’s rating for Growth, Sentiment, and Momentum here.
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WEBR shares were trading at $8.72 per share on Monday morning, down $0.84 (-8.79%). Year-to-date, WEBR has declined -31.97%, versus a -17.13% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing. More...
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