Weber Inc. Is As Cheap As It Will Get

Record Demand Drive Results For Weber Inc. 

Grill maker Weber Inc. NYSE: WEBR made a splash in the market this summer when the company IPO'd. Price action has been vigorous in the wake of the initial sale and we think it will continue to be so. Some iffiness amongst the analysts and a mixed report from competitor Traeger have the shares below the IPO price and trending sideways but we think the bottom is in. Price action over the past few weeks smacks of a double bottom that is being confirmed in the wake of the Q3 earnings report. Despite headwinds in the form of freight, labor, and input cost the company was able to outperform expectations and guided the mark higher.

“We continued to experience record levels of demand for Weber® grills and accessories across every product fuel type in our portfolio and every region globally,” said Chris Scherzinger, Chief Executive Officer of Weber. “We see ongoing resilience in the outdoor cooking category and continued market share growth for Weber. Our growth priorities around new product innovation, direct-to-consumer, and channel and geography expansion have generated strong growth throughout 2021, with fiscal year-to-date sales up 41%, outpacing the category.

Weber Inc. Invests In Growth

Weber Inc. has been investing in a multi-pronged strategy to spur growth that includes product innovation, international markets, and innovative new offerings. Those efforts resulted in the fifth straight quarter of record revenue or $668.86 million in total receipts. This is good for a gain of 19.3% over last year and brings the year-to-date growth to 41% versus the same time frame in 2019. Sales were strong in all categories but led by a 35% gain in the EMEA region, a 25% gain in APAC, and trailed by a 9% gain in the Americas. Notably, the Americas are by far Weber's largest category.

Moving down the reports, the company experienced the same headwinds as competitor Traeger but was able to manage them better than expected. The company’s net income came in at 2.7% versus the high double digits of last year while the adjusted EBITDA came in at 20.1% to drive strong earnings on the bottom line. On a GAAP basis, the company reported $32.84 per share in earnings.

Looking forward, the company is expecting revenue strength in all categories and is guiding the market higher. Weber is expecting $1.96 to $1.97 billion in full-year revenue versus the consensus of $1.96 and we see upside risk in the figures. 

It's Wait-And-See Time For Weber

As good as the Q3 results and guidance are, it looks like the analysts are waiting to see what will happen next before making their next move. Data from Marketbeat.com shows no analyst commentary in the wake of the earnings reports leaving the community neutral bordering on bullish. The current consensus price target assumes 33% upside from recent price action reinforcing our bullish view on the stock.

The Technical Outlook: The Bottom Is In For Weber Inc. 

Weber Inc. opened up more than 5% off of the freshly set low in the session following the earnings release. While the price action is bearish intraday, the candle signal is bullish and confirms support at the post IPO low. It is our view that price action will move up from this level forming a double bottom at $14 with the baseline near $17.25. A move up to retest resistance at the baseline should be followed by a break to a new high and an eventual retest of the post  IPO highs near $20.