CarParts.Com: Growth Continues Despite Broader Economic Concerns (NASDAQ:PRTS) – Seeking Alpha
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If there’s one good thing about a difficult year for investing, it’s that some stocks can be pushed down enough to eventually make for attractive opportunities. One great example can be seen when looking at CarParts.com (NASDAQ:PRTS). With shares falling even more than the broader market, but the company still growing at a nice clip, the business is definitely worthy of some attention. This is especially true when you consider that profitability to the firm is finally looking up. Due to these factors, I have finally decided to increase my rating on the business from a ‘hold’ to a soft ‘buy’, indicating my belief that the company will likely outperform the broader market moving forward. I don’t think the outperformance would be tremendous by any means. But I do think that it will be enough to make investors who buy into the company happy.
Shares Finally Look Decent
The last time I wrote an article about CarParts.com was in February of this year. In that article, I applauded the company’s attractive growth over the past few years. This increase in revenue came after a couple of rather difficult years by comparison. Long term, I believed then and believe now that the company will likely do well for itself and its investors. But due to the high price that shares were trading for at that time, I ultimately rated the business a ‘hold’. What this means is that I believe a company would generate performance more or less along the lines of the broader market for the foreseeable future. Since then, the company has performed a bit worse than I anticipated. Shares are down 23.1% compared to the 16.7% decline experienced by the S&P 500.
Seeing this kind of drop in price, investors may be led to believe that the fundamental performance of the company has suffered. However, that has not been the case. When I last wrote about the business, I only had data covering through the third quarter of the company’s 2021 fiscal year. Now, we have data covering not just the rest of that year, but also the first quarter of 2022. What that data shows is that the company continues to expand at a nice rate. Consider the entirety of 2021. During that year, revenue came in at $582.4 million. That represents an increase of 31.2% over the $443.9 million generated in 2020. To be fair to investors who are less but less on the company than others might be, growth in the final quarter of the year did moderate some. Revenue during that time came in just 15.5% above where it was the same quarter one year earlier.
From a profitability perspective, results were a bit mixed for the year. The company generated a loss in 2021 of $10.3 million. That compares to the $1.5 million loss experienced in 2020. On the other hand, operating cash flow really improved. This metric came in at negative $7 million. That compares to the negative $19.1 million generated in 2020. If we adjust for changes in working capital, then cash flow inched up from $14.1 million to $15.4 million. Meanwhile, EBITDA for the company also improved, climbing from $16 million to $16.8 million.
While this performance was positive, it alone was not enough to change my opinion on the …….