Canaccord Genuity Reaffirms Their Buy Rating on Roots Corporation

By Jason Carr

Wall Street analyst has provided a review for the NA company today, but retained the same rating on the stock. Analyst Camilo Lyon from Canaccord Genuity rated Roots Corporation (TSX: ROOT) a Buy, setting a C$16 price target.

Lyon observed:

“ROOT reported mixed Q1 results with adj. EPS of -11c coming in slightly below our -10c est. and consensus at -9c as comps of +6.4% missed our +15.6% estimate due to poor weather during April that severely impacted traffic. That said, gross margin expansion of +315bps sharply exceeded our expectations of +153bps. Comps were negatively impacted by ice storms throughout April, which coincided with the company’s high volume customer appreciation four-day event that impacted ~80% of the store base and comps by -1.8%. This had a correspondingly positive impact on gross margin as the company decided not to increase promotions at quarter end. Given the high quality of the inventory (i.e. aged inventory % is below LY) and strong reception to the spring/ summer product offering, we believe ROOT can manage through this inventory in Q2 and Q3.”

According to TipRanks.com, Lyon is a 2-star analyst with an average return of 0.8% and a 49.7% success rate. Lyon covers the Consumer Goods sector, focusing on stocks such as Columbia Sportswear, Sequential Brands, and Deckers Outdoor.

Read also: DPW Holdings (DPW) Uses Bitcoin to Reduce Debt; Shares Soar

Roots Corporation has an analyst consensus of Strong Buy, with a price target consensus of C$15.50.

Based on Roots Corporation’s latest earnings release for the quarter ending January 31, the company reported a quarterly net profit of C$20.86 million. In comparison, last year the company had a GAAP net loss of C$5.11 million.

Roots Corp. engages in the provision of leather goods, apparel, and accessories. It operates through the Direct-to-consumer ( DTC); and Partners and Other segments. The Direct-to-consumer segment comprises of sales through its corporate retail stores, and e-commerce.

The company’s shares closed on Wednesday at C$11.05.