Darden Restaurants in the first quarter of fiscal 2022 increased its net profit more than sixfold and raised its annual forecast. Revenue increased to $ 2.306 billion from $ 1.527 billion a year earlier. Net income for the quarter ended Aug. 29 was $ 230.9 million, or $ 1.75 per share, compared to $ 36.1 million, or $ 0.28 per share, in the comparable period last year. Market consensus predicted earnings of $ 1.64 per share on revenues of $ 2.24 billion. Darden Restaurants will pay out $ 1.1 per share in dividends, as it did a quarter earlier. The register of shareholders will close on October 8, payments will begin on November 1.
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Nike raises online sales
Nike increased its revenue by 16% in the first quarter of fiscal 2022, which was below expectations and caused a drop in the company’s share price. The indicator rose to $ 12.248 billion against $ 10.594 billion a year earlier. Excluding changes in exchange rates, it increased by 12%. Net income in June-August was $ 1.874 billion, or $ 1.16 per share, compared to $ 1.518 billion, or $ 0.95 per share in the same period last year. Market consensus assumed the company’s earnings at $ 1.12 per share on revenue of $ 12.5 billion. Online sales of the company in the last quarter increased by 28%, reaching $ 4.7 billion.
Better.com
Better.com is a digital platform that facilitates real estate transactions. The company, founded in 2016, provides access to a digital platform that provides insurance services for mortgages, real estate, legal status and homeowners themselves. Long-term rentals are still in vogue, but many Americans dream of owning their own residential property. The housing boom fueled by the pandemic has begun to subside, but prices are up more than 23% over the year and are likely to continue to rise next year amid the Fed’s ultra-soft monetary policy and new Covid threats. People still need to buy homes, and this is where Better.com comes to the rescue, with a mission to make the journey to home ownership more comfortable through insurance solutions.
Better.com offers fairly standard products like mortgage insurance, but the platform uses computer algorithms and artificial intelligence to lower costs for potential home buyers. By keeping the entire process online, Better.com is able to offer clients mortgage approvals faster and with much lower fees compared to other mortgage brokers. Better.com claims that through its innovative platform, the company can cut the standard time it takes to close a home purchase in half from 42 days to 21 days.
Better.com launched Better Real Estate in 2018, and Better Settlement Services and Better Cover in 2019. Better Real Estate differs from traditional real estate business models in that it is a “partner, not a seller” whose mission is to find the right property for the client. Better Mortgage offers a variety of mortgages in both fixed and floating rate. Better Cover is a division of the company that helps buyers get a complete list of insurance solutions.
Better.com made it onto CNBC’s annual Disruptor 50 list, ranking 15th in 2020. The company’s services are currently available in 47 states and the company says it is working to expand its geographic presence in all US states. Better.com has received several outstanding awards since its inception, such as Nerdwallet’s Best Mortgage Refinancing Company in 2021, LinkedIn’s Best Startup in 2020, and One of Forbes’s Top Mortgage Lenders in 2021.
In seven years, Better.com has raised $ 905 million in ten investment rounds. During the Series D investment round, which took place in November 2020, the company raised $ 200 million. In April 2021, SoftBank acquired the company’s shares in the volume of $ 500 million. The purchase price of the shares was not disclosed, so it is not possible to evaluate the company. Later it became known that Better.com plans to go public through a SPAC deal. The subject of the merger will be Aurora Acquisitions Corp., which was listed in March this year with a valuation of $ 220 million under the ticker AURCU.
During Better.com’s IPO, SoftBank’s subsidiary SB Management Limited intends to invest $ 1.5 billion in the combined company, which will be channeled into equity (PIPE) Better.com. Following the completion of the merger, Better.com’s senior management is expected to remain in office. After the merger, the management of the company expects a valuation of Better.com at $ 7.7 billion. The management of Better.com predicts that by 2023 the company will have annual profit of $ 1 billion on revenues of $ 5.1 billion. The exact date of the IPO of Better.com has not yet been set. however, it is very likely that the deal could be closed as early as Q4 2021. According to HousingWire, if Better.com is valued at $ 7.7 billion after the merger, it will become the third largest non-bank mortgage company in the United States after Rocket Mortgage and United Wholesale Mortgage.
Fabletics
Fabletics was founded in 2013. Through a partnership with actress Kate Hudson, who became the face of the company, Fabletics has become a popular brand. The company sells clothing, footwear and accessories for an active lifestyle. The company’s operating perimeter includes 64 retail stores in North America. Fabletics products can also be purchased online through the website or app. The company positions its product line as a cross between luxury yoga apparel brands like lululemon and mainstream apparel brands. Fabletics provides its customers with a unique membership service that allows them to participate in their daily outdoor apparel purchases, but customers are free to skip a month in which the assortment is unsuitable.
In 2017, parent company TechStyle contemplated selling Fabletics. At the time, the asset was valued at $ 1.5 billion. In addition to Fabletics, TechStyle owns brands such as JustFab and ShoeDazzle, so any parent company funding rounds are not entirely linked to Fabletics. TechStyle has raised at least $ 336 million in venture capital, according to Crunchbase. Given that Fabletics is largely considered the main brand of the company under Hudson’s patronage, it’s safe to assume that TechStyle has made a significant contribution to this brand.
In mid-July, rumors circulated in the market that Fabletics was attracting investment banks for a potential IPO. Currently, there is no information through what mechanism the company can go public, but we believe that Fabletics will choose the path through a traditional IPO rather than through SPAC. According to media reports, Fabletics would like to raise about $ 500 million through a public listing, which the company is likely to spend on investments in growth and business scaling.
The market is eagerly awaiting news of the upcoming deal, including the filing S-1 form, which will contain many financial and specific details about the upcoming IPO. As of the end of August, there was no information about the IPO in public sources, however, we learned that Fabletics plans to cooperate with major underwriters such as Morgan Stanley, Goldman Sachs, Barclays and Bank of America. We are also aware of the wishes of the management, who hope that the company will be able to achieve the $ 5 billion valuation.
We Raise Salesforce Valauation Amid Improved Annual Forecast
Salesforce.com has improved its revenue forecast for fiscal 2022, which ends in January 2022. The company expects to generate revenues in the range of $ 26.25-26.35 billion, up from the expected $ 26.2-26.3 billion at the end of August. Salesforce intends to increase revenue to $ 31.65-31.8 billion in fiscal 2023 on an operating margin 3-3.5%. By comparison, in fiscal 2021, the company’s revenue grew by 24% to $ 21.25 billion. We are raising our target value for the company’s shares from $ 300 to $ 325.
The market does not notice serious facts
We are launching coverage of Sony with a target valuation of the company’s stock of $ 144. Sony is a world-renowned company with a leading position in computer games and music, as well as a popular film and television business. Sony also has a leading position in the high-sensitivity CMOS sensor market.
Sustainable growth while maintaining high profit margins
Adobe in the third quarter of fiscal 2021 increased its net profit by 27% yoy, while the figure exceeded forecasts of experts. The company’s revenue jumped to $ 3.94 billion from $ 3.23 billion a year earlier. Net income for the three months ended September 3 was $ 1.21 billion, or $ 2.52 per share, compared to $ 955 million, or $ 1.97 per share, in the comparable period a year earlier. Adjusted Adobe’s earnings rose to $ 3.11 per share. The market consensus implied an increase in net income to $ 2.3 per share on revenue of $ 3.89 billion. Management of the company predicted earnings at $ 2.27 per share and revenue of $ 3.88 billion.
High potential for business growth
We kick off the Deluxe coverage and assign a fair value to the company at $ 55. We see significant growth potential for Deluxe’s business as the company continues to help corporate clients improve payment discipline, streamline operational processes and grow business volumes. First American’s recent acquisition of online and mobile payments significantly improves the Deluxe platform, which combines high cash flow (checks, promotions) with strong revenue growth (cloud services, payments).
Fed meeting passed without surprises
Last week, the S&P 500 increased its market cap by 0.5%, while the Nasdaq 100 remained at the levels of the end of the previous week. At the beginning of the week, it became known about the financial problems of the largest Chinese developer Evergrande. On Monday, the company missed loan payments to at least two banks. The intensity of the situation around the debt problems of Evergrande had a serious impact not only on the Chinese stock markets, but also on the global ones. However, closer to the middle of the week it became known that the Chinese authorities are ready to provide support so that Evergrande does not allow default. On Thursday, the company was supposed to pay the coupon for the Eurobonds, but it is still not clear whether the payment was made. This information should appear this week. In our baseline scenario, we expect to see Evergrande’s managed debt restructuring that should not cause significant damage to the Chinese financial system.
Uber is ready for positive EBITDA
Uber Technologies reported that it received positive EBITDA in July and August, which improved its forecast for the entire current quarter. Now the company expects to receive adjusted EBITDA for the third quarter in the range from minus $ 25 million to plus $ 25 million, while the earlier expected loss of $ 100 million. The total volume of orders is projected in the range of $ 22.3-23.2 billion against the previous estimate of $ 22 -24 billion. Also, Uber has clarified the forecast for the fourth quarter and now intends to receive adjusted EBITDA in the amount of up to $ 100 million, while previously expected just a positive figure. We have improved our valuation of the company from $ 80 per share to $ 82. Our assessment is based on a differentiated approach, thanks to the global scale of the company and its market leadership position in various transport and logistics segments, coordinated by means of applications.