FLWS - 1-800-Flowers.com (FLWS) - Keeping What It Got And Then Some

Fiscal Q4 results in line with expectations on strong revenue growth. Total company revenues increased a solid 16.6% to $486.9 million, better than our $472.0 million estimate. The revenue performance was notable given that it was on top of the 61% revenue growth in the prior year quarter, which benefited from enhanced ecommerce growth during the height of the Covid pandemic. Adjusted EBITDA of $30.2 million was in line with expectations. Favorable foundation for growth. We believe that the enhanced revenues during Covid set the stage for favorable revenue growth going forward as the company markets to the new customers, increases its loyalty based customers, Passport, and develops new products. Favorable guidance against difficult comps. Management provided attractive fiscal year end 2022 revenue growth guidance between 10% and 12% and Adj. EBITDA growth between 5% and 8%. The company has a history of providing conservative guidance. We are tweaking our estimates to be more conservatively within management's guidance and to reflect higher ocean freight and transportation costs. Strong finances. As of June 30, the company had $174 million in cash and $162 million in debt. Given the anticipated favorable fundamentals, management indicated that free cash flow is expected to exceed $100 million. We believe that the company is in a strong financial position to repurchase shares and/or to seek acquisitions, which we believe will enhance long term revenue and cash flow growth. Attractive stock valuation. Near current levels, the FLWS shares trade at 9.3 times Enterprise Value to our fiscal 2022 estimates. As depicted in this report, the shares trade at a substantial 45% discount to average valuations in its peer group. Notably, our $47 price target would still represent a discount to that group. We reiterate our Outperform rating and our $47 price target. Read More >>