1847 Goedeker Stock: Massive Opporunity (NYSEAMERICAN:GOED)

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1847 Goedeker: Massivive opporunity

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The following segment was excerpted from this fund letter.


1847 Goedeker (NYSE:GOED)

In March, Goedeker reported very strong Q4 and FY21 results where revenues grew 32%, both gross margins and EBITDA margins came in higher than expected, and despite an incredibly challenging environment for all retailers, GOED grew faster than any industry peer while outlining levers to pull for sustained performance of this kind. Furthermore, GOED provided FY22 guidance of high-teens to low-twenties percentage revenue growth and flat margins despite the headwinds of freight costs, inventory availability and increasing personnel costs.

Despite these phenomenal developments, shares trade below the price they were prior to the results being reported. Should this persist, and if GOED continues to execute in line with their guidance, the company’s valuation – as a fast growing, asset light, high return on capital e-commerce business – will fall below 3x EBITDA. This is all before the buildout of the company’s two new fulfillment centers (designed to increase conversion and provide margin uplifts), a normalization of the supply chain (to bolster inventory availability), and any execution of the recently announced $25mm buyback (which if executed in full could retire 15% of shares outstanding and be massively accretive).

The recent developments and subsequent valuation have left me confused, and I’ve voiced my concerns to management along with other larger shareholders about making sure this business development story is being told properly. I think very highly of CEO Albert Fouerti who has proven to be an excellent operator, but there is much lacking in the capital markets and investor relations side of things.

While I believe our concerns are appreciated by the management team, it’s my aim to stay in their ear until things begin to correct and some of the low-hanging fruit is addressed. Goedeker has made tremendous strides in a short period of time in areas such as the c-suite and has navigated this difficult time period for retailers very well. However, communication with investors should be polished, sell side relationships should be explored and the company needs to (and will) treat their share repurchase program with the utmost seriousness. The market is currently not believing, but the opportunity for GOED remains massive and I’m optimistic we will be rewarded over time.


Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.



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