Leslie’s, Inc. (NASDAQ:LESL), a leading retailer of swimming pool products, delivered better-than-expected Q1 FY24 results, even as it experienced significant losses and a fall in same-store sales. Management gave a positive forecast for sales and earnings in 2024. However, analysts have rated the stock a consensus Hold with a price target near the current price level.
An Undisputed Market Leader
Leslie’s, Inc., through its subsidiary Leslie’s Swimming Pool Supplies, is the premier retailer of swimming pool products and related supplies. The company is headquartered in Phoenix, Arizona, and runs an impressive network of over 1000 stores in 37 states across the U.S.
Not just limited to physical stores, Leslie’s caters to both residential and commercial markets by offering more than 30,000 items online and through special orders. The company also champions its own brand of pool and spa supplies, which significantly contribute to its total sales.
Diving into LESL Stock
Leslie’s was founded in 1963, went public in the early 1990s but was taken private again in 1997. In October 2020, the company filed for an IPO again, launched at a price of $17 per share. The stock opened at $20.60 per share, reached a high point of roughly $30 in June 2021, and has been sliding downward since. The stock is down over 71% over the past three years.
Things looked to have taken a turn for the better late last fall. Investors were looking forward to the financial results for the first quarter of FY24 (ended Dec. 30, 2023), and many were not disappointed.
Management announced better-than-expected results for revenue ($174 million vs. analysts’ consensus of $169.6 million) and adjusted earnings per share (EPS) (-$0.20 vs. analysts’ estimate of -$0.21). Moreover, the company maintained its forecast for 2024 sales (between $1.41 billion and $1.47 billion) and adjusted EPS ($0.25 to $0.33).
However, there were also a few key misses. Gross margin was lower than analysts’ expectations, same-store sales fell 11.7% year-over-year, and the company’s GAAP loss widened to $0.21 per share compared to a loss of $0.16 per share a year earlier.
A number of the analysts have since reiterated Hold ratings, save for one. Analyst Shaun Calnan from Bank of America Securities reiterated a Buy rating on Leslie’s, with a price target of $8.
What is the Price Target For LESL?
LESL is currently rated a Hold based on the consensus rating from the nine Wall Street analysts who have offered reviews on Leslie’s in the last three months. The average price target is $6.53, with a high forecast of $8 and a low forecast of $5. The average price target represents a 5.36% downside from the current levels.
Are We There Yet?
In the face of the recent financial results, potential investors must weigh both the challenges and opportunities for Leslie’s. It still remains a market leader in the swimming pool products industry, with a substantial store network, a prominent online presence, and an impressive range of products. The future outlook remains relatively stable, with management maintaining its sales and EPS forecast for 2024.
Nevertheless, potential investors should bear in mind that the consensus rating stands at Hold. with an average price target suggesting the stock may be fairly valued at this point. Careful consideration should be given to all these factors before making an investment decision.
