Sometimes the biggest gains in stocks come from the most unlikely corners. One such unlikely gainer was At Home (NYSE: HOME), which posted gains up over 10% in early trading. It's given some of those gains back as of this writing, but it's still well off Friday's close, and a good portion of the market is already wondering exactly why.
Drawing At Home Comfort From the Numbers
Basic fundamentals seem to have contributed the lion's share of gains to At Home's recent upward punch. Not only did the company hike its fourth-quarter earnings projections, it also offered up some truly hopeful numbers about sales entirely. Thanks to a winning run in the now-concluded holiday shopping season, adjusted earnings per share (EPS) have bolstered the floor, even if the ceiling isn't so optimistically raised.
The previous range was $0.31 - $0.36, and now, the current range is $0.33 - $0.36. This actually meshes with the earlier-released consensus figures from FactSet, who pegged EPS at $0.33 for the company.
That wasn't the only point in At Home's favor; previous sales guidance figured sales in the $385 million to $393 million range, and At Home now figures that investors should look toward the upper rather than the lower end of that scale for likely outcomes. However, a same-store sales decline of between four and six percent is also in the cards, and At Home expects that number to be toward the high end as well. FactSet's consensus rings assent here too, with expectations of $388.5 million in sales overall and a same-store sales drop of 5.3%.
The Possible Features of At Home's Turnaround
All of this is pretty good news for the company, especially given that it had been on a rocket sled downward, losing just over half its value in the last three months alone. This was amid a retail sector that had gained 6.2%, based on SPDR S&P Retail ETF figures, and an S&P 500 gain of just shy of 10% even. So what turned it all around?
First, the gains are important. Sure, they're short-term at best and come on the heels of a holiday shopping season's figures, but gains are gains. They may be able to hold going forward, and if they do, then At Home may be on its way back from an otherwise disastrous picture.
Second, At Home has some stock in being a “growth company”. It's actually slated to have an appearance at the 2020 ICR Conference in Orlando, Florida, where it will join such names as Draft Kings, Planet Fitness (NYSE: PLNT), Luckin Coffee (NASDAQ: LK) and several others. Having improved numbers like these just ahead of a conference show like that gives it an extra shot of credence that it may be able to build upon going forward.
Third, this may prove to be one more example of the “mall curse.” We've seen how stores like Children's Place(NASDAQ: PLCE), Foot Locker (NYSE: FL), and American Eagle (NYSE: AO) have taken hits in recent weeks, while standalone stores like Target (NYSE: TGT) have gained. This isn't universally the case, but it certainly doesn't hurt that At Home boasts an average store size of 110,000 square feet. Five new store openings back in October likewise didn't hurt matters, giving more shoppers the chance to shop. The store layout also encourages browsing, with plenty of stock contained handily in one place. This allows shoppers to wander and see what all is available, while more than a few likely wonder what some piece might look like in a living room or den. Oddly, At Home doesn't have an online shopping component, which runs contrariwise to most of what we've seen of retail market successes lately.
Staying At Home May be the New Vacation
Perhaps the biggest factor of all is the “staycation” phenomenon. Some might remember “staycations” as one of the concepts emerging from the economic catastrophe that was 2007, holding on into 2010. The staycation encouraged people to save money by not going particularly far on vacations, saving money on things like hotel stays and fuel costs by coming home at night after enjoying local attractions. This in turn prompted some to augment their home experience to make it feel more like staying in a resort. Stores like At Home, which specialize in home décor items, could get a boost from such trends accordingly.
If there are some out there who are starting to feel shaky about the long-term health of the economy—and let's be honest, the term “recession” is hovering in the back of at least a few minds—we may be seeing some preparing their homes for staycations and maybe even firings. That's going to prompt runs to stores like At Home, as consumers plan to pull back from travel and stay closer to home.
Whether you're pessimist or optimist about the economy's future, it's safe to say that sometimes you just want to fancy up your home a little. That's the opportunity in a nutshell for At Home, and maybe the start of bigger gains to come.
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