Nautilus (NLS.US) is a home fitness and fitness company. One of the advantages of Nautilus is that the COVID situation has worked in its favor and that as the economy reopens (as it has largely done already), users will return in droves to the gym and will have minimal need for equipment. home fitness. But that is not entirely true, since the new habits developed during 2020 will make a hybrid work environment conducive and therefore, the sport will also exercise in a hybrid way. It differs within its sector, because its high-tech machinery offers interactive displays and connectivity to have access to all the information while doing sports.
Considering that the company has set a fiscal target for operating income of $ 150 million for fiscal year 2026 and that 18% of its market capitalization is made up of cash (which means that it has $ 100 million of net cash ), assumes that Nautilus is indicating in the most favorable environment will grow steadily at a 10% CAGR.
However, the problem is that for a company that is clearly in fashion right now, it could negatively impact their revenue growth rates. On the other hand, the low level of growth for the next few years could already be included in its valuation, which has corrected strongly from its recent highs at $ 30 per share (its all-time high took place in the IPO at $ 43).
Nautilus changed its fiscal reporting targets in 1 month to better align with its peers in the industry. That is why I have shown it above as fiscal year 2021, at the close of the quarter on March 31st, and then jump to the first fiscal quarter 2022 for your guidance.
Nonetheless, fiscal year 2022 compares to its second quarter of 2021 in the chart above, the quarter that increased 94% year-on-year last year. In other words, despite the harsh comparisons in Q2 2021, Nautilus is still aiming for strong growth rates - a 45% YoY increase on average and, if we consider that it has actually divested a business unit , your guidance for the next quarter is closer to 55% on average.
source: Nautilus earnings report
However, the important quarter will be September, where strong 2020 sales could overshadow Q3'2021 results. It will be anyone's guess until we know the publication.
Initially, we know that these types of companies only need to indicate that they are investing to grow in the future and that the market will reward them more. But on the other hand, as we noticed in recent months, the market has become very defensive against unprofitable growth opportunities.
Even so, the evolution of Nautilus will be anything but calm because: 1) the company has very tough competitors in the sector, 2) its more advanced machinery (due to the large screens and connectivity) is also more expensive and 3) the cost The base of materials such as microchips and integrated circuits has exploded and their availability is scarce. These main factors should put pressure on the value.
The company has had an exceptional stock market development, from the 2020 lows of $ 1.20 per share, it revalued to $ 31.30 in March 2021, almost 2,500%. A posteriori and very impacted by the shortage of semiconductors and microchips, it corrected to $ 14.30 where it has started its recovery again.
Without divergences in the evolution of the price and the RSI indicator, the recovery of the level of $ 16.15 or 50% of the fibonacci retracement, could mark the beginning of a positive trend accompanied by the bullish guideline of increasing lows that began in March. 2020. In addition, the achievement of local rising minimums and maximums supports the theory of this approach.