Nautilus, Inc. NLS did not receive the same amount of love during the coronavirus as Peloton PTON and others. Still, NLS action crushed Peloton in 2020, despite selling off in early November, and its portfolio of home gym offerings is more diverse.
More importantly, the outlook for the company remains strong and some of its other fundamentals are helping make it a cheap stock that could be worth buying, with Apple AAPL and other companies betting on the future of fitness focused. on digital.
Nautilus is one of the historic players in the home training industry in which Peloton thrived during the pandemic. The company’s home gym equipment portfolio includes Bowflex, Nautilus, Octane Fitness and Schwinn. These offers include free weights, treadmills, ellipticals, indoor cycling equipment and more. This helps make it a more diverse business than Peloton, which only sells treadmills and stationary bikes.
NLS broke our third profit and revenue estimate on November 9. The company’s gross profit soared more than 255%, with sales rising 152% to $ 155 million. Investors should note that this revenue growth outpaced the 94% sales expansion in Q2 and 11. And it was able to increase both its DTC and in-store sales, with a direct increase of 277. % and a retail trade of 108%.
Nautilus entered the fourth quarter with an order backlog of $ 72.8 million as it rushes to ramp up production to meet demand. On top of that, Jim Barr, CEO of Nautilus, which took over the company last summer, laid out a plan to enter the connected training space. And those efforts paid off during the coronavirus, as gyms in North America remain closed or at limited capacity.
Nautilus has rolled out new products with “digital immersive” capabilities through connected monitors, which is critical as people seek to find on-demand digital workout classes at home. This includes its new membership-based digital cardio offering called JRNY. “We have hired a Chief Digital Officer who has implemented large-scale digital experiences in some of the world’s largest technology companies to lead our JRNY and e-commerce teams and accelerate our ongoing digital transformation,” said the CEO Jim Barr in the remarks prepared for the third quarter.
Nautilus looks set to benefit from the larger trend of digital home workouts, where people take various classes on their TVs, smartphones, smart monitors, and more. The market clearly has significant growth potential.
Athleisure giant Lululemon LULU in June announced plans to buy home fitness startup Mirror for $ 500 million. In addition, Apple AAPL has just launched its new subscription connected training platform called Fitness +.
All of this helps to show how important the industry is, and it could gain popularity if people got used to training at home. And even if a vaccine is successfully rolled out over the next year, it’s unclear how quickly people will return to a crowded gym.
Wall Street has clearly taken notice and this has helped to skyrocket NLS stock in 2020. NLS jumped over 900% last year to crush PTON, Zoom Video ZM and other big pandemic thieves. .
This race includes a 150% climb over the past six months. Investors who didn’t buy NLS might also be happy to see that it has already seen a big sell-off after the results, which coincided with positive vaccine news.
NLS jumped more than 3% on Monday to close regular trading at $ 17.08 a share, which puts it around 40% from its early November high of around $ 28 a share.
The stock is also trading at 0.9X 12-month forward sales. This is a reduction from its own six-month median, its industry average of 2.4X, and PTON’s 7.7X.
Going forward, Zacks estimates that its fourth quarter revenue is expected to increase by 83%, with the first quarter of fiscal 21 expected to increase by 56%. Meanwhile, adjusted profit is expected to climb about 533% this quarter and 525% next quarter. And it has crushed our earnings estimates by an average of 300% over the past four periods.
The stock’s earnings revisions are helping him land a Zacks No.1 (strong buy) rank right now. Nautilus also offers an “A” rating for growth and a “B” for value in our style scoring system and it is part of an industry that sits in the top 3% of our more than 250 Zacks industries.
Ultimately, Nautilus and others could continue to see increased demand, as gyms could be one of the last things to get back to normal, no matter what. And the stock price below $ 20 and a solid valuation have fueled buyback speculation in the scorching space.
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