下面是小编为大家整理的美国硬装零售业：不要沮丧,供大家参考。
HD and LOW"s now trade at a 50% premium to MAS & MHK
Global Research 8 February 2019
U.S. Hardlines Retail UBS Evidence Lab inside: HD / LOW: Don’t Despair, It’s Not Disrepair
Home Improvement trends likely slowed in 4Q With concerns on the state of the cycle front and center as of late, we believe HD & LOW"s 4Qs will provide a chance for the co."s to articulate why the industry still stands on good footing. We think the 4Q results were likely impacted by uncooperative weather & commodity price deflation. The recent UBS Evidence Lab M2m est. included a downwardly revised 4.5% SSS for HD & 1.2% SSS for LOW. Plus, lumber prices declined -24% during 4Q. Still, the market seems braced for softness as evidenced by the UBS Evidence Lab Market Thinking Game. Only 22% & 50% investors are bullish on HD & LOW respectively in Jan "19 (vs. 49% & 100% in Oct "18). This skepticism is also reflected in their avg multiple (now at 17x NTM P/E vs 21x prior). However, lower rates are supporting these stocks as the 10-year has declined by -50 bps over the last 3 mos. Thus, we think it’s prudent to look through the potential noise in 4Q. HD has a tricky set up for 4Q We model 4.5% SSS for HD (cons 4.6%; buy-side bar 4.0-4.5%). Though, there could be some downside risk to our est. The ticket/traffic breakdown will be important as the market will look for signs that the cycle has legs. Traffic is an indicator of this. We also model 10 bps of OM expansion driven largely by the leverage from a MSD SSS & the extra week. Finally, we think HD will guide in-line with its LT outlook of 4.5-6.0% SSS & point to modest OM improvement. This would put its "19 EPS at $10.41 (cons $10.26). LOW"s SSS could come in below cons but it should reiterate its FY"19 guide We model a 1.5% comp (cons. 2.1%; buy-side bar 1.0-2.0%). We also forecast -120 bps of OM contraction driven by inventory rationalization pressures & higher freight costs. We believe LOW should show some progress in managing costs. Our 4Q EPS est. i s
$0.78
( c on s .
$0. 80) .
F i na ll y ,
L O W
s houl d
r e i t e r a t e
i t s
F Y " 19
o ut l ook
( SSS
3% ;
EPS
$6.00-$6.10). Importantly, we think the co. is in a good position to meet or beat this expectation as its "19 outlook implies only a 30 bps core OM improvement YoY. Pricing stability is one reason why HD & LOW deserve a premium Our Jan "19 pricing survey of 178 items showed AMZN"s basket was +6.8% more expensive than HD"s (vs. +0.1% in Oct 2018) & 4.5% more expensive than LOW’s (vs. - 1.0% cheaper in Oct 2018).
Michael Lasser Analyst michael.lasser@ubs.com
+1-212-713 2440 Atul Maheswari, CFA
Associate Analyst
atul.maheswari@ubs.com
+1-212-713 4103 Michael Goldsmith
Analyst michael.goldsmith@ubs.com
+1-212-713 2951 Mark Carden
Analyst mark.carden@ubs.com
+1-212-713 3218
Figure 1: HI vendor sales accelerated in 4Q"18 Figure 2: NTM P/E (HD/LOW vs MHK/MAS)
24.0%
20.0%
16.0%
12.0%
8.0%
4.0%
0.0%
-4.0% 4Q"12 4Q"13 4Q"14 4Q15 4Q16 4Q17 4Q"18E
HI Comps (avg HD & LOW)
HI Vendor Sales (avg HD & LOW)
30x
26x 22x 18x 14x
10x Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 HD and LOW average NTM P/E MHK and MAS average NTM P/E
Source:
Company reports, UBS estimates Source: Company reports, UBS
www.ubs.com/investmentresearch
This report has been prepared by UBS Securities LLC. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 34. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
HI vendors reported a 6.1% sales increase for the period corresponding to HD and LOW"s 4Q"18. Retailers, Broadline Americas Equities
Summary
We think Home Improvement trends decelerated in 4Q. Some macro indicators such as turnover and home prices moderated during 4Q. At the same time, commodities could be deflationary in 4Q as lumber and copper declined -24% and -14%, respectively. The recent UBS Evidence Lab Macro-to-Micro (M2m) estimate included a downwardly revised 4.5% comp for HD and 1.2% SSS for LOW. However, the UBS vendor index highlighted that vendor sales growth accelerated to 6.1% compared to 4.0% in 3Q. Vendor sales have historically had a 75% correlation with HD & LOW SSS. Further, the recent UBS Evidence Lab Housing Intentions surveys of 2k individuals have highlighted a 300-500 bp increase in the percentage of owners planning on projects. Plus, they have signaled an intention to spend 20-30% more on those projects. In terms of cadence, we believe the period started off strong but probably tailed off a bit in January. HD and LOW"s forward multiples have moderated meaningfully over the past several months as investors have increasingly been concerned about the state of the housing cycle. In particular, HD and LOW are now trading at an average NTM P/E of 17x, compared to 20x in Sep "18. We believe current multiples are already pr i c i ng
i n
s l ow e r
t r e nds
i n
F Y " 19.
A s
s u c h,
i f
t he r e
i s
a ny
i ndi c a t i on
t h a t
t op- lin e growth can remain steady in the upcoming year, it could drive HD and LOW"s stocks higher. In the table below, we present a snapshot of various home builders and products companies who have recently reported. These companies have surprised positively on sales by an average of 0.9%. Though, trends have varied meaningfully from company to company. Figure 3: Snapshot of Building Products / Home builders who recently reported Company Ticker Release Date Sales % Sales % EPS % Post Release
Beat/Miss
Surprise Surprise Price Change Meritage Homes Corporation
MTH 01/30/2019 Beat 5.8%
25.9%
10.1%
Whirlpool Corporation WHR 01/28/2019 Miss
-1.8%
12.2%
9.7%
Lennar Corporation Class A LEN
01/09/2019 Miss
-0.3%
25.4%
7.9%
Masco Corporation
MAS 02/07/2019 Beat 1.7%
13.9%
6.8%
M.D.C. Holdings, Inc. MDC 01/31/2019 Beat 6.2%
-17.3%
5.6%
PulteGroup, Inc. PHM 01/29/2019 Beat 3.4%
-23.9%
0.8%
NVR, Inc. NVR
01/25/2019 Beat 1.5%
15.6%
-0.2%
Caesarstone Ltd. CSTE
02/06/2019 Beat 1.2%
4.5%
-0.3%
Fortune Brands Home & Security FBHS
01/31/2019 Miss
-3.2%
-7.8%
-0.9%
Sherwin-Williams Company SHW 01/15/2019 Miss
-2.7%
-14.4%
-4.1%
KB Home
KBH 01/09/2019 Beat 0.3%
3.1%
-4.5%
Beazer Homes USA, Inc. BZH
02/05/2019 Miss
-1.1%
-5.9%
-5.4%
Stanley Black & Decker, Inc. SWK 01/22/2019 Beat 0.5%
0.4%
-15.5% Average
0.9%
2.4%
0.8%
Source: Company Reports, Factset
Using UBS Evidence Lab data, an approach was developed that could help us better understand how home improvement retailers have been performing. The Macro-to-Micro Nowcasting methodology uses economic releases such as retail sales, building permits, housing starts, and non-residential construction spending as well as company level spending data in order to determine company specific SSS estimates for the quarter. Historically, the revenue and comp estimates for HD and LOW have been on the right side of consensus 75% to 95% of the time.
For HD, the Nowcasting methodology estimates a 4.5% comp for 4Q"18, which is in line with our estimate, and slightly below the consensus forecast of 4.6%. For LOW, it estimates 1.2% same store sales growth, which is below our forecast of 1.5% and the consensus forecast of 2.1%. Figure 4: M2m Nowcasting current view SSSG Y/Y Acceleration Y/Y Revenue Surprise UBS Analyst
M2m
M2m Organic Acceleration
M2m Organic
M2m Revenue
Consensus Revenue
M2m Revenue
Revenue Growth
Analyst Release Date
Company
Quarter Metric SSSG (Y/Y) (%)
Acceleration ( σ )*
Growth (Y/Y)
Growth (Y/Y)
Surpris e ( σ )**
(Y/Y) Rating
* (M2m Acceleration)/Standard Error of M2m Acceleration ** (M2m - Consensus)/Standard Error of M2m
Source: Bloomberg, Factset, UBS Research, UBS Evidence Lab
The weather was not very cooperative for outdoor projects in 4Q. November was colder than usual for most of the country. Plus, extreme weather late in January likely also acted as a drag on outdoor projects. Figure 5: November 2018 Departure from Normal Temperature Figure 6: December 2018 Departure from Normal Temperature Figure 7: January 2019 Departure from Normal Temperature
Source: High Plains Regional Climate Center Source: High Plains Regional Climate Center Source: High Plains Regional Climate Center
Commodity prices declined significantly in 4Q. This will probably act as a drag on ticket growth. Specifically, lumber prices decreased -24% YoY on average in 4Q, which compares to -1% decline in 3Q. Further, copper prices decreased -14% on average in 4Q. This compares to a -10% decline during last quarter. Over the past couple of quarters, commodity inflation represented a significant contribution to average ticket. Given the recent decline in lumber and copper prices, this is unlikely to be the case in 4Q. 26 Feb HD 4Q18
Y/Y Revenues
11.2%
11.4%
(0.1) 10.8%
4.5%
Buy
SSSG
4.5%
-0.2%
(0.1) 4.5%
4.6%
(0.0) 27 Feb LOW 4Q18
Y/Y Revenues
1.3%
1.7%
(0.3) 1.0%
1.5%
Buy
SSSG
1.2%
-0.3%
(0.1) 1.2%
2.1%
(0.6)
Lumber prices decreased -24% on average during HD and LOW"s"4Q"18 Figure 8: Lumber prices (YoY growth) vs. HD & LOW average comps
50%
40%
12%
10%
Figure 9: Copper prices (YoY growth) vs. HD & LOW average comps
50%
40%
12%
10%
30% 8% 30% 8%
20% 6% 20% 6%
10% 4% 10% 4%
0% 2% 0% 2%
-10%
-20%
0%
-2%
-10%
-20%
0%
-2%
-30%
-4%
-30%
-4%
4Q"10 4Q"11 4Q"12 4Q"13 4Q"14 4Q"15 4Q"16 4Q"17 4Q"18E
Lumber Price (YoY) Average HD & LOW Comp 4Q"10 4Q"11 4Q"12 4Q"13 4Q"14 4Q"15 4Q"16 4Q"17 4Q"18E
Copper Price (YoY) Average HD & LOW Comp
Source: Bloomberg, NAHB, UBS, Company Reports Source: Bloomberg, FactSet, UBS, Company Reports
Home Improvement vendors sales accelerated sequentially in 4Q. Most vendors highlighted that the underlying state of the industry is solid. They believe that despite a somewhat slowing US housing market a...