CarParts.Com Stock: Still Warrants Caution – Seeking Alpha

February 14, 2022 by No Comments

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Lately, as a result of the COVID-19 pandemic, one industry that has flourished from a revenue and profitability perspective has been the automotive space. In particular, automotive retailers and automotive parts retailers. One company that fits this latter description that has a unique business model focused solely on providing parts and services online is a firm called (PRTS). Recently, the company’s share price has taken quite a beating. This comes even as revenue has grown at a rapid pace and as profitability has suffered to some degree. Based on all the data provided, while the company does continue to expand at a nice clip, shares today are priced at levels that probably just don’t make sense for any but the most patient investors.

A tough time to own PRTS stock

The last time I wrote about was in an article published in October of 2021. In that article, I made a number of accurate and valid points regarding the company. I said that recent performance was impressive and I indicated that while there was risk of an eventual return to prior years results, that the company also seemed to offer potential in the long run because of its business model. In addition to this, I also claimed that shares of the business were looking rather pricey. However, at the end of the day, I felt as though the high price and weak profitability more or less balanced out with the rapid revenue growth the business was experiencing. And because of that, I rated the company a neutral prospect. Unfortunately, things have not been all that well since. Investors in the company would have generated a loss of 39.6%. That compares to a 1.1% decline experienced by the S&P 500 over the same time period.

Author – SEC EDGAR Data

Based on this plunge in share price, you might think that has exhibited some weakness from a growth perspective. But that is not the case. Revenue in the first nine months of the company’s 2021 fiscal year, for instance, came in at $444.2 million. That represents an increase of 37% compared to the $324.2 million the company generated one year earlier. At the time of my prior article, the company had already reported results for the first half of its 2021 fiscal year. So the only new data to come out since involves the third quarter of the year. In the picture, quite frankly, was positive. Revenue during that quarter came in at $141.8 million. That is 20.8% above the $117.4 million the company achieved in the same quarter one year earlier. Clearly, demand for online purchases of automotive parts is alive and well. Management has provided a preliminary look at revenue for the 2021 fiscal year. Based on their statement, sales should have been around $582 million. That would imply final quarter sales of $137.8 million, resulting in a revenue increase for the full 2021 fiscal year of 31.1%.

Author – SEC EDGAR Data

What has not been so great, however, has been profitability. For the full first nine months of 2021, the company has generated a net loss of $5.2 million. That compares to a $1.9 million profit experienced the same time one year earlier. This came in large part as a result of a $4.6 million loss experienced in the most recent quarter. That’s far worse than the $1.4 million gain experienced the same quarter …….



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