Haverty Furniture, Noodles & Co, Novavax and Zoom Video highlighted as Zacks Bull and Bear of the Day

Zacks Equity Research
·9 min read

For Immediate Release

Chicago, IL – March 2, 2021 – Zacks Equity Research Shares of Haverty Furniture Companies, Inc. HVT as the Bull of the Day, Noodles & Company NDLS as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Novavax, Inc. NVAX and Zoom Video Communications, Inc. ZM.

Here is a synopsis of all four stocks:

Bull of the Day:

HAVERTYS is still cashing in on the big push to "nest" during the pandemic, even as the vaccine rolls out. This Zacks Rank #1 (Strong Buy) saw double digit store comparables in the fourth quarter.

HAVERTYS is a furniture retailer with 120 showrooms in 16 states in the South and Midwest. Established in 1885, this small cap company with a market cap of $658 million, specializes in the middle to upper-middle price ranges.

A Big Beat in Q4 2020

On Feb 17, Havertys reported its fourth quarter 2020 results and blew by the Zacks Consensus by $0.48. Earnings were $1.37 versus the Zacks Consensus of $0.89.

It has beat 3 out of the last 4 quarters, even as a global pandemic hit its supply chain and manufacturing capabilities.

Sales rose 12.9% to $241.3 million with comparable store sales jumping 13.7% as demand for furniture remained strong.

Havertys saw strong sales across all furniture categories in the quarter.

Mattress sales were up slightly in the fourth quarter as some supply rebounded.

However, there's still challenges with merchandise availability as manufacturers are hampered by the ongoing coronavirus outbreaks, raw material shortages and problems with shipping capacity.

Expanding in 2021

While Havertys saw a lot of sales leap online in 2020, it's still making a bet on its showrooms.

In 2021, it plans to spend $23 million to open a store in Myrtle Beach, S.C., which is a new market for the company, is putting in a new store in The Villages, Florida and will open another location in an existing market, which it didn't disclose.

It will also close one store in 2021.

It's retail square footage is expected to rise about 1% in 2021 from 2020.

2021 Earnings Estimates Rise

Not surprisingly, after that big beat in Q4 and the bullish comments about strong demand for furniture, the analysts have been raising their estimates for 2021.

The 2021 Zacks Consensus Estimate rose to $2.12 from $1.70 since the earnings announcement.

That's earnings growth of 12.8% as the company made $1.88 in 2020.

Very Shareholder Friendly

Even with the pandemic raging, Havertys still was able to pass along good news to its shareholders.

It returned $70 million to shareholders in 2020 including $14 million in quarterly dividends, which it has been paying every year since 1935.

It also paid out $36 million in special dividends and repurchased almost $20 million in common stock.

Havertys' dividend is currently yielding 2.4%.

And it finished 2020 debt free.

What more could an investor want?

Shares Near 5-Year Highs

There doesn't appear to be a slowdown in furniture demand to start 2021.

Shares of Havertys have been on a tear, adding 115% over the last year and hitting new 5-year highs.

But are they too expensive now, to get in?

Havertys has a forward P/E of 17.

For investors looking for a retailer for the reopen trade, Havertys should be on the short list.

Bear of the Day:

Noodles & Co. has pivoted to digital sales during the coronavirus pandemic. This Zacks Rank #5 (Strong Sell) is seeing improvement to start 2021 but earnings estimates have recently weakened.

Noodles & Company operates more than 450 restaurants around the United States that serves noodle dishes.

An Earnings Miss in Q4

On Feb 25, Noodles & Company reported its fourth quarter results and missed on the Zacks Consensus Estimate, reporting a loss of $0.04 versus the Zacks Consensus of $0.03.

Revenue fell 5.9% to $107.2 million from $113.9 million.

Comparable restaurant sales, the key metric for restaurants, fell 4.7% system-wide, with it falling 4.2% for company-owned restaurants and falling 7.9% for franchise restaurants.

There were green shoots in the quarter, however.

It introduced low-carb Cauliflower Gnocchi which boosted the quarter.

Digital sales soared 128% in the quarter as orders moved online and accounted for 62% of all sales in the quarter.

Recent months have been difficult for restaurants as the resurgence of COVID has resulted in new restaurant restrictions.

Yet, the company said that it had seen nice momentum in the comp sales to start the first quarter of 2021.

Outlook for the First Quarter of 2021

Due to COVID uncertainties, Noodles & Company did not give full year 2021 guidance.

But some companies are feeling more confident of giving some outlook about the current quarter, including Noodles & Company.

Noodles & Company expects first quarter comparable restaurant sales in the mid-to-high single digits.

It will also open between 10 to 15 new restaurants, systemwide, in 2021.

Earnings Estimates Cut in the Last Week

1 estimate was cut in the last week after the earnings report, pushing down the 2021 Zacks Consensus Estimate to $0.27 from $0.29 60 days ago.

However, that's a big improvement from 2020 when the company lost $0.29.

That's earnings growth of 193%.

Shares at 2-Year Highs

Noodles & Company shares have turned around from the initial coronavirus sell-off in March 2020 and are now at 2-year highs.

Shares aren't cheap, with a forward P/E of 34.6.

The restaurant companies are still being challenged by the coronavirus, even as the vaccine is being rolled out. There are no Zacks Rank #1 (Strong Buy) restaurant stocks right now.

With the shares at new highs, it might be time for investors interested in Noodles & Company to stay on the sidelines waiting for a pullback and improvement in the earnings estimates.

Additional content:

Markets Up Big Monday; Zoom (ZM) Beats, Novavax (NVAX) Misses in Q4

What a difference a new month makes! After slogging through volatility and pot holes through much of February, investors put aside their concerns about interest rates rising (and signaling the end of the era of "cheap money") and put their funds to work in equities of every stripe: the Dow rose 1.95% on the day, +603 points; the S&P 500 gained 2.38%; the Nasdaq rose 3%, nearly 400 points; and the small-cap Russell 2000 took the cake, +3.37% in regular trading Monday.

We also see Q4 results from Maryland-based biotech Novavax after today's close. While the company took a big hit on its bottom line — -$2.70 per share was well off estimates for -$1.53 per share and -$1.13 posted in the year-ago quarter — revenues were up big year over year to $279.7 million. This marks the company's sixth miss in the past 10 quarters. On the news, shares slipped, but have climbed slightly into positive territory since.

However, Novavax's fortunes are about to change this year: its phase-3 trial in the UK for its Covid-19 vaccine has proved 96% effective on older strains of the coronavirus, 86% effective on the U.S. strain and 49-60% on the tougher South African strain. In early Q2 2021, Novavax expects to file for approval in the UK , and perhaps an Emergency Use Approval (EUA) in the U.S. The company estimates it can manufacture 2 billion doses globally by mid-year.

Zoom Video, arguably the biggest success story of the pandemic era, also posted Q4 results — Zoom beat estimates by a wide margin on both top and bottom lines: $1.22 per share versus 78 cents in the Zacks consensus on $882 million in quarterly sales, well ahead of the $809 million anticipated and +369% year over year. The company also raised guidance for next quarter and full-year 2021.

It's the seventh straight earnings beat for Zoom since the company went public in 2019. Shares are up 6% in late trading after gaining 10% in the normal session. Subscriber numbers have continued to go through the roof: customers with 10+ employees in Q4 grew an astounding 470%. Overall, the company posted its third straight 300%+ gain in overall subscribers. It would appear the specter of a new, open economy has not taken the shine off Zoom Video to this point.

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