Sally Beauty Holdings, Inc. SBH has received a downgrade on Thursday.
Bolton Weiser says she is cautious of Sally Beauty’s fundamentals and outlined several reasons for downgrading the company:
The analyst argues that Sally Beauty continues to struggles for store traffic within an industry shift to e-commerce sales and saw a 14% operating cash flow decline in 2019. Amid a struggle for capturing store traffic, the company is doubling down on store growth in the upcoming year, expecting a net increase of 30-50 stores. Issues in the European business is also a cocern for the analyst.
DA Davidson also says the possibility of disappointing same-store sales is greater than the company’s upside surprise potential.
“After posting negative same-store sales in FY17 and FY18, Sally Beauty Holdings reported +0.3% in FY19, and ended the year with a strong 1.1% increase in F4Q19, the highest since F4Q16,” said Bolton Weiser.
“Along with the stock price, we think investor expectations have taken a step up, and that same-store sales below +1.0% could be viewed as disappointing.”
Sally Beauty Holdings reported a fourth quarter earnings and sales beat last Thursday, but the analyst believes the company could be challenged to meet expectations in the fourth-quarter of 2020, when the company faces a tougher compare, with the Street projecting same-store sales of +1.0%.
Sally Beauty Holdings closed down 2.54% at $19.02.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.
All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.
Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.
Rate collection and criteria: Click here for more information on rate collection and criteria.