Shares of e-commerce florist and gift retailer 1-800-FLOWERS (FLWS, Financial) took a significant hit, dropping 12.06% to $7.91. The stock tumbled in the afternoon session following the release of its second-quarter earnings results, where both revenue and EPS fell short of Wall Street's expectations. Additionally, the company's full-year EBITDA guidance failed to impress, largely due to the weak consumer environment impacting demand for its products.
Dissecting the financial data provided for 1-800-FLOWERS (FLWS, Financial), the company's market capitalization currently stands at $508.22 million. The GF Score, which is a composite measure evaluating growth, financial health, profitability, and value, positions FLWS with a commendable score of 84. Nevertheless, the company's stock displays multiple warning signs, including a declining gross margin and operating margin over the past five years. The gross margin has been decreasing at an average rate of 2.8% annually, and the operating margin has dropped by 15.9% per year on average over the same period.
1-800-FLOWERS (FLWS, Financial) does show some strengths. The company's Altman Z-Score, which measures financial stability, is a strong 3.05. Its Piotroski F-Score, indicating overall financial strength, is high at 7 points. Additionally, the Beneish M-Score of -3.48 suggests that the company is unlikely to be manipulating its financial statements. However, the stock's predictability score is low, ranked at just 1 out of 5, which indicates high uncertainty in future earnings.
The stock's valuation is another point of interest. According to our valuation models, the GF Value for 1-800-FLOWERS (FLWS, Financial) is estimated at $9.02, categorizing the stock as "Modestly Undervalued." For a detailed valuation, you can visit the GF Value page. The company's price-to-book ratio stands at 1.05, which may appear attractive but is offset by a concerning net margin of -0.42% and an ROE of -1.62%. The company's EV/EBITDA ratio is 11.14, and its EV/Revenue ratio is 0.38, which suggests reasonable valuations relative to its earnings.
Investors should also consider the company's recent performance. Over the past year, the stock has experienced a 26.02% decline in price. The 10-year price change is a more modest 4.47%, reflecting a long-term growth trajectory that has recently faced headwinds. Given the company's weak near-term prospects but a modestly undervalued stock price, potential investors might find 1-800-FLOWERS (FLWS, Financial) appealing, provided they are prepared for the volatility and uncertainties that come with it.
In conclusion, the current challenging consumer environment and underwhelming quarterly results have added pressure on 1-800-FLOWERS (FLWS, Financial). While the stock has its strengths, such as strong financial stability indicators and a modest undervaluation, the multiple warning signs and declining margins warrant a cautious approach for potential investors.
