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Fox Factory Q3 Earnings: Is NasdaqGS:FOXF Expensive at 55.3x Price/EPS?

in EARNINGS/INVESTING IDEAS by

Fox Factory Holding Corp. (NasdaqGS:FOXF) is scheduled to report Q3 earnings results after markets close for trading on November 10, 2020.

The company is expected to report earnings of $0.87/share on revenue of $252.5 million. The consensus earnings per share (EPS) of $0.87/share is based on a poll of 9 analysts and represents a growth in eps of 5.0% over the same quarter last year, when the company reported earnings of $0.83/share.

The revenue forecast of $252.5 million based on a poll of 9 analysts implies a year-over-year (YoY) growth in revenue of 19.5%. Last year the company reported $211.3 million in revenue for the quarter.

Expected to report EPS growth of 5.0% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $252.48 $211.32 19.5%
EPS $0.87 $0.83 5.0%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarters.

What are your expectations from Fox Factory Holding Corp. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.29 $0.50 69.9% Beat
Q1, 2020 $0.55 $0.52 −5.5% Missed
Q4, 2019 $0.63 $0.65 3.8% Beat
Q3, 2019 $0.79 $0.83 5.1% Beat
Q2, 2019 $0.66 $0.68 2.9% Beat
Q1, 2019 $0.48 $0.55 14.8% Beat
Q4, 2018 $0.56 $0.58 4.2% Beat
Q3, 2018 $0.66 $0.72 9.3% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending July 3, 2020, the stock price reacted by increasing 14.6%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $93.16 $106.72 14.6% Increase
May 6, 2020 $52 $54.20 4.2% Increase
March 3, 2020 $63.44 $64.81 2.2% Increase
October 30, 2019 $64.30 $60.94 −5.2% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.47, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.47 implies a 0.7% chance of earnings manipulation.

Fundamentals And Technical Analysis

Fox Factory Holding Corp. is currently trading at $97.32/share, up 1.3% for the day. The company is trading at approximately 85.8% of its 52-week high of $113.41/share. The company’s stock price is down −8.8% since the last earnings report and up 11.3% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 75.25 suggests the company is trading in technically overbought territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:FOXF Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 55.34 and a forward P/E multiple of 38.62.

Fox Factory Holding Corp.’s current share price also implies a price-to-book (P/B) multiple of 6.37. The following table summarizes some other key fundamental ratios:

Data as of November 8, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date July 3, 2020
Stock Price (Current) $97.32
P/E Ratio 55.3x
P/E Ratio (Fwd) 38.6x
PEG Ratio −3.6
Total Debt / Total Capital 9.6%
Levered Free Cash Flow -$9.824 million
EV / EBITDA 36.5x

Finbox

Fox Factory Holding Corp. is a mid-cap stock with a market capitalization of $4.033 billion and a total enterprise value of $4.265 billion. The company operates in the Consumer Discretionary sector and the Auto Components industry.

Fox Factory Holding Corp. designs, engineers, manufactures, and markets ride dynamics products worldwide. The company offers front fork and rear suspension products for mountain bikes, road bikes, and e-bikes; and powered vehicle products for side-by-side vehicles, on-road vehicles with off-road capabilities, off-road vehicles and trucks, all-terrain vehicles, snowmobiles, specialty vehicles and applications, motorcycles, and commercial trucks. It also provides mountain and road bike wheels, and other performance cycling components, including cranks, chain rings, pedals, bars, stems, and seat posts, as well as sells aftermarket products to retailers and distributors. The company owns, licenses, and sells under the FOX, FOX RACING SHOX, and RACE FACE trademarks. Fox Factory Holding Corp. was incorporated in 2007 and is headquartered in Braselton, Georgia.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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