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QQQ   304.10 (-1.64%)
AAPL   120.13 (-1.58%)
MSFT   226.73 (-0.36%)
FB   257.64 (+0.87%)
GOOGL   2,033.93 (+1.12%)
TSLA   621.44 (-4.86%)
AMZN   2,977.57 (-0.91%)
NVDA   494.81 (-3.39%)
BABA   230.50 (-2.44%)
CGC   31.01 (-6.71%)
GE   13.57 (+0.97%)
MU   84.33 (-5.36%)
NIO   39.28 (-5.42%)
AMD   77.75 (-3.85%)
T   28.92 (+0.70%)
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ACB   9.82 (-6.12%)
DIS   188.03 (-2.20%)
BA   224.71 (-1.68%)
NFLX   511.29 (-1.81%)
BAC   36.50 (+0.72%)
QQQ   304.10 (-1.64%)
AAPL   120.13 (-1.58%)
MSFT   226.73 (-0.36%)
FB   257.64 (+0.87%)
GOOGL   2,033.93 (+1.12%)
TSLA   621.44 (-4.86%)
AMZN   2,977.57 (-0.91%)
NVDA   494.81 (-3.39%)
BABA   230.50 (-2.44%)
CGC   31.01 (-6.71%)
GE   13.57 (+0.97%)
MU   84.33 (-5.36%)
NIO   39.28 (-5.42%)
AMD   77.75 (-3.85%)
T   28.92 (+0.70%)
F   11.93 (-1.97%)
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DIS   188.03 (-2.20%)
BA   224.71 (-1.68%)
NFLX   511.29 (-1.81%)
BAC   36.50 (+0.72%)
QQQ   304.10 (-1.64%)
AAPL   120.13 (-1.58%)
MSFT   226.73 (-0.36%)
FB   257.64 (+0.87%)
GOOGL   2,033.93 (+1.12%)
TSLA   621.44 (-4.86%)
AMZN   2,977.57 (-0.91%)
NVDA   494.81 (-3.39%)
BABA   230.50 (-2.44%)
CGC   31.01 (-6.71%)
GE   13.57 (+0.97%)
MU   84.33 (-5.36%)
NIO   39.28 (-5.42%)
AMD   77.75 (-3.85%)
T   28.92 (+0.70%)
F   11.93 (-1.97%)
ACB   9.82 (-6.12%)
DIS   188.03 (-2.20%)
BA   224.71 (-1.68%)
NFLX   511.29 (-1.81%)
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The Lovesac Company Is A Hyper-Growth Story You Might Want To Own

Thursday, December 10, 2020 | Thomas Hughes
The Lovesac Company Is A Hyper-Growth Story You Might Want To OwnThe Lovesac Company Is Growing And Growing Strong

The Lovesac Company (NASDAQ:LOVE) is one of those stocks I just happened to run across one day and am glad I did. To call it a microcap is an overstatement. The company’s newly reported Q3 revenue is a mere $75 million and barely a blip on the radar for the average S&P midcap holding. Lovesac is more accurately described as a nanocap but one with some big gains ahead.

This company is growing by leaps and bounds because of a combination of factors that promise to support growth over the long-term. On the one hand, Lovesac was well-positioned for the pandemic as a maker of affordable, sustainable, foam-filled furniture accessories. On the other, a developing partnership with Best Buy is also expanding the addressable market.

Lovesac Is Immune To COVID

My first reaction to Lovesac’s earnings history was “pandemic? What pandemic”. The company has been delivering solid double-digit growth since it went publish 2.5 years ago and didn’t miss a beat this year. Revenue growth decelerated a bit in the 2nd quarter, don’t get me wrong, but to a robust 29% from a near 36.5% CAGR and the rebound is already on. The company pulled in $74.7 million in the 3rd quarter which is up 20% from the prior quarter and 43.5% from the same quarter last year.

Revenue strength was driven by sales in all categories that resulted in significant earnings leverage. In terms of the analysts and their expectations, the top-line results beat the consensus by a full 1300 basis points. Sales were underpinned by DTC and eCommerce channels which saw YOY growth in excess of 125%.

Moving down the report, the company’s gross margin expanded 487 basis points delivering a solid beat on the bottom line. Margin improvement is due to cost-leverage sales gains along with favorable product mix and higher realized sales prices. At the operating level, SG&A expenses declined 1,200 basis points as a percent of sales. The GAAP earnings came in at $0.16 reversing a loss in the prior year’s quarter and beating consensus by $1.05.

“Our business fundamentals are strong, and our recently expanded partnership with Best Buy broadens our audience and expands Sactionals adoption in an agile, capital-efficient manner. In combination with continued progress on our key strategic initiatives, we are well-positioned to capitalize on product demand and as such, we expect a strong year over year increase of 50% to 60% in Adjusted EBITDA1 for the fourth quarter. We look forward to building on our progress and success as we close out the fiscal year,” said Shawn Nelson, chief executive officer.

The Analysts Like The Lovesac Company

The analysts like The Lovesac Company and why wouldn’t they? The company is a hyper-growth story that is likely to see revenue grow exponentially for the next five years or more. The average rating is a buy with a consensus near $40 but take that with a grain of salt. The most recent research came out in September after the Q2 report and doesn’t reflect the latest news. Looking forward, I think the analysts are going to start upping their targets for revenue, earrings, and share prices very soon.

On a technical basis, the shares responded favorably to the news. Price action advanced more than 10% before the opening bell to gap up strongly and test a long-term resistance level during Wednesday’s session. The move looks strong and is supported by the indicators so investors should expect to see the resistance test again if not surpassed. A move above resistance, near $40.50, would be bullish and trigger a buy. Longer-term, a move up to new all-time highs looks likely.

The Lovesac Company Is A Hyper-Growth Story You Might Want To Own

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
The Lovesac (LOVE)1.5$53.82-9.0%N/A-414.00Buy$45.43
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15 Technology Stocks that Analysts Love

There are more than 1,100 technology companies traded on public markets in the United States. Given the sheer number of hardware makers, social networks, software companies, service providers and other tech stocks, it can be hard to identify which tech companies are going to outperform the market.

Fortunately, Wall Street's brightest minds have already done this for us. Every year, analyst issue approximately 15,000 distinct recommendations for technology companies. Analysts don't always get their "buy" ratings right, but it's worth taking a hard look when several analysts from different brokerages and research firm are giving "strong buy" and "buy" ratings to the same tech stock.

This slide show lists the 15 technology companies that have the highest average analyst recommendations from Wall Street's equities research analysts over the last 12 months.

View the "15 Technology Stocks that Analysts Love".

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