Daily Brief Consumer: Tesla Motors, elf Beauty Inc, Britvic PLC, Dowlais Group , Lamb Weston Holdings and more

• As I warned, troubled Q4 results were worse than investors expected, even with further drops in already plunging market expectations following disappointing deliveries dubiously called a “beat.”
• Even numbers as reported were weaker than reported when I stripped out subsidies and accounting boosts which mask underlying trouble—as is typical with Tesla (see attached model).
• Tesla continues to foster the false impression that it’s healthier, more profitable and more successful than it is, which greatly overstates its ability to weather the storm already upon it.

• We are initiating coverage of Starco Brands, Inc. (“Starco” or the “Company”), an emerging owner and marketer of branded consumer goods, with a Buy rating and price target of $0.25, or 26X our December 2024 Adjusted EBITDA.
• Starco’s stable of brands includes: Art of Sport body and skincare products, Skylar hypoallergenic fragrance and beauty products; Soylent plant-based food products, Whipshots vodka infused whipped cream aerosols and Winona butter flavored popcorn spray.
• As such, we view STCB as a rapidly growing owner of highly differentiated brands, with the business model to register consistent and strong overall top and EBITDA returns and are initiating coverage of STCB with a Buy rating and $0.25 price target.

Britvic delivered an encouraging start to FY24 with robust Q124 results that showed good revenue progression, reflecting the strength of its brand portfolio. Group revenue growth of 8.1% was driven by positive trends in both price and volumes and was broad-based across Britvic’s geographies, continuing the positive momentum from FY23. Particularly strong growth in Brazil reflects the success of the Extra Power acquisition. Britvic reported robust trading over the important Christmas period, with revenue growth of 12.1% and volumes up 6.4% in December. The company continues to invest in its brands, including a refresh of Pepsi, and consequently is confident in achieving FY24 market expectations.

Dowlais Group’s shares trade at a significant discount to our fair value. We have lowered our forecasts due to reduced expectations for automotive production and currency impact, but the key to unlocking value remains the group’s margin trajectory. We expect management to confirm that these targets (pre-central cost operating margin over 10% against 7.1% forecast for FY23) remain on track with the impending maiden set of results.

Key points (machine generated)

• Lamb Weston’s stock price has dropped by about 30% since July 2023 due to market concerns regarding the potential impact of GLP-1s on consumer consumption and caloric intake behavior, particularly in the greasy fried foods category.
• Despite this decline, experts believe it is an overreaction and a good opportunity for investors. Lamb Weston is considered a high-quality business with strong pricing power and long-term earnings growth potential.
• The stock decline is attributed to misunderstandings, including reports of volume decline and concerns about demand and pricing power, which are not accurately reflecting the company’s true prospects.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.