As my thoughts turn to warmer weather and cooking burgers on the grill, two grill makers that went public last summer have been burned to a crisp.
Traeger Inc. (COOK) , which debuted in July at $18 a share, then saw its shares hit $32 the following month, now languishes below $10. It currently trades at about 17.5x next year's consensus estimates. Fourth-quarter estimates are calling for a loss of five cents a share.
Meanwhile, Weber Inc. (WEBR) , which went public just days after Traeger, has suffered a similar though not as extreme fate. WEBR shares rose above $20 just days after its IPO at $14 a share on Aug. 5, bounced around until late October, and have been sliding ever since. WEBR closed Tuesday at $10.35.
On Monday, Weber reported below-consensus fiscal first-quarter results, with revenue of $283 million that was off by about $28 million and a loss of 19 cents a share, which was worse than the 12-cent consensus loss. Weber shares initially tanked on the report as they fell to the mid $8 level in early trading before recovering to close at $10.60. That was some interesting action, although I did not take advantage of it in order to add to my current position
Weber blamed the current state of the economy, including inflation and supply chain issues, for the less-than-stellar results. JP Morgan cut its rating for Weber to "neutral" from "overweight" and reduced the price target from $13 to $9.50.
Weber trades at about 21.5x fiscal 2022 (September year-end) consensus earnings estimates and 16x fiscal 2023 estimates. Interestingly, WEBR's current short-interest ratio (percentage of share float that has been sold short) is a considerable 30.3%, while COOK's short interest stands at 11.4%. WEBR curiously initiated a four-cent quarterly dividend in November and currently yields 1.5%.
It is hard to say whether warmer weather will spur consumers to buy more grills, but this is a rough environment as supply chain issues and inflation double-team both consumers and manufacturers.
Weber's quality creates a conundrum of sorts; I won't be buying a new Weber grill anytime soon as my current one, which is 20-plus years old, is still getting the job done.
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