Sophisticated Investors Should Avoid: NewAge Inc. (NBEV), Purple Innovation Inc. (PRPL)

NewAge Inc. (NASDAQ: NBEV) shares are 17.03% up in the year-to-date (YTD) period and have moved -1.84% or -$0.04 lower in the latest trading session. However, stock’s trailing 12-month performance remains nearly +117.13% lower. Comparatively, the stock is -28.76% down YTD and 31.48% over the trailing 3-month period. If we look at the shorter duration, its week performance is -0.70% and -4.48% over the month.

Analyst Recommendations

On July 22, 2019, Northland Capital recommended the NBEV stock is a Market Perform, while earlier, Alliance Global Partners had Reiterated the stock as a Buy on November 15, 2019. 3 analysts offering the recommendations for the stock have a consensus rating of 2.30 to suggest that the NBEV stock is a “Moderate Buy. 0 of the 3 analysts rate the stock as a “Sell”, while 0 has rated it as “Underweight”. 2 recommend buying, with 0 rating it as an Overweight.

The stock currently trades at $2.13. The forecasts give the NewAge Inc. stock a price target range of $7.00 on the higher side while at least one analyst think the stock could plunge to a low of $5.00. The two limits represent an upside potential of 69.57% or 57.4%.

Earnings Forecast

Analysts estimate the earnings to decrease -11.10% in the current quarter to -$0.06, up from the -$0.14 reported in the same quarter a year ago. For the current year, earnings should grow to an average of -$0.32, up 14.20% from -$0.58 reported last year. Analysts also offered guidance for the next financial quarter, with their average projected EPS at between -$0.04 and $0. Wall Street estimates earnings per share to be at an average of $0.22 for the next year.

Insider Transactions Summary

According to SEC data, total insider shares purchases at the company stands at 11 over the last 12 months, while SEC filings reveal that there have been 4 insider sales over the same period. Insiders have purchases 901,109 shares while those sold by company executives and officers stand at 845,000. The last 3 months have seen insiders trade a total of 0 and 795,000 in purchases and sales respectively.

HAAS TIMOTHY J, a Director at the company, bought 100,000 shares worth $0.19 million at $1.92 per share on Dec 16. The Director had earlier sold another 15,000 NBEV shares valued at $25650.0 on Jun 05. The shares were sold at $1.71 per share. Willis Brent D (Chief Executive Officer) sold 25,000 shares at $2.73 per share on Oct 15 for a total of $68250.0 while Willis Brent D, (Chief Executive Officer) sold 25,000 shares on Sep 16 for $80923.0 with each share fetching $3.24.

Purple Innovation Inc. (NASDAQ:PRPL), on the other hand, is trading around $17.89 with a market cap of $1.27B and analyst research firms have a negative stance on its shares. Analysts predict that the stock will reach $27.71 and spell out a more modest performance – a 35.44% return. Some analysts are even forecasting $0.75 per share in earnings this year on a short term (1 year) basis.

Let us briefly look at the Purple Innovation Inc. (PRPL) financials, with a focus on its operating details as indicated in its earnings report for the last quarter.

Company balance sheet and cash flow

PRPL’s operating margin was positive on the trailing 12 months basis, remaining steady at 10.10%, while the operating expenses over the recent quarter were at $50.15 million. This represented a 69.63% of the company’s total revenues which amounted $165.1 million. With this in place, we can see that the company’s diluted EPS declined -$0.11 on the year-over-year period, shrinking to -$0.16 as given in the last earnings report.

In terms of the balance sheet & cash flow as of (Sep 2020), the total assets figure advanced to $303.39 million from $137.91 million over the previous quarter. The cash flow from operating activities totaled $72.35 million, significantly higher than the $2.15 million reported in the year-ago quarter. The company’s free cash flow for the quarter was $64.34 million.

Insider activity

Insiders have transacted a total of 12 times at Purple Innovation Inc. over the last 6 months, with insider purchases undertaken 12 times and accounting for 1,856,826 shares. Insider sales totaled 0 shares over the same period, with these deals completed in 0 transactions. Looking at these numbers, we realize that net purchases over that period are 12.0 shares. Insiders now hold a total of 1.35M shares after the latest sales, with 0.00% net shares purchased.

Major holders

Insiders own 29.00% of the company shares, while shares held by institutions stand at 67.00% with a share float percentage of 9.78M. Investors are also buoyed by the number of investors in a company, with Purple Innovation Inc. having a total of 93 institutions that hold shares in the company.