Yahoo Finance Bull Of The Day: BRC Inc (BRCC)
BRC Inc (BRCC) is a Zacks Rank #1 (Strong Buy) that has a F for Value and an A for Growth. This company makes and ships coffee and associated merchandise. There are a handful of stores in Arkansas but the majority of sales are made online. Let’s explore more about this company in this Bull of The Day article.
Description
Black Rifle Coffee Company engages in the business of sourcing, processing, manufacturing, packaging, distributing, marketing, and selling coffee and other food and beverage products. It utilizes a three-pronged approach to craft a brand that resonates with its customer base and enhances brand loyalty: Inform, Inspire, and Entertain. The company was founded by Evan Hafer and Mat Best in 2014 and is headquartered in Salt Lake City, UT.
Earnings History
When I look at a stock, the first thing I do is look to see if the company is beating the number. This tells me right away where the market’s expectations have been for the company and how management has communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
I see a good earnings history with 3 beats and 1 miss over the last year. There was a monster beat at the end of 2023 where the company posted 19 cents in EPS when a loss of a penny was expected. That beat skews the average in a big way but was followed up by another profitable quarter.
Earnings Estimates Revisions
Earnings estimates revisions is what the Zacks Rank is all about.
Estimates are moving higher for BRC.
This quarter has moved from a loss of 2 cents to a loss of 1 cent.
Next quarter actually slipped from a gain of a penny to breakeven.
The full year 2024 has moved from a loss of 2 cents to a gain of 3 cents.
Next year has moved from $0.07 to $0.12.
Growth
This year the company is looking at 13% topline growth this year to $447M. Next year that number increases by another 10% to just shy of $500M.
The most recent quarter saw topline growth of 17%.
Valuation
The flip to profitability means a low level of earnings right now, but that also means the forward PE is especially bloated at 236x. That changes dramatically when we push that multiple out to 2025. The price to book is a little high right here at 27x and price to sales is 3.4x.
Margins are the story here as gross margins moved from 33% in 1Q23 to 43% in the most recent quarter. That is a huge swing.
We have seen operating margins go from -4% to 0.7% to 2%.
Margin expansion along with sales increases will drive this stock higher.
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BRC Inc. (BRCC) : Free Stock Analysis Report
