Well positioned to deliver growth? – SmileDirectClub Inc. (SDC), Peloton Interactive Inc. (PTON)

SmileDirectClub Inc. (NASDAQ: SDC) shares are -9.95% down in the year-to-date (YTD) period and have moved -3.08% or -$0.25 lower in the latest trading session. However, stock’s trailing 12-month performance remains nearly +116.21% lower. Comparatively, the stock is -49.36% down YTD and -9.12% over the trailing 3-month period. If we look at the shorter duration, its week performance is 7.66% and -7.74% over the month.

Analyst Recommendations

On June 25, 2020, Stephens recommended the SDC stock is a Overweight, while earlier, Stifel had Reiterated the stock as a Buy on July 13, 2020. 13 analysts offering the recommendations for the stock have a consensus rating of 2.40 to suggest that the SDC stock is a “Moderate Buy. 2 of the 13 analysts rate the stock as a “Sell”, while 1 has rated it as “Underweight”. 8 recommend buying, with 0 rating it as an Overweight.

The stock currently trades at $7.87 and analysts tracking its performance over the next 12 months have a consensus estimate price target of $10.08. The forecasts give the SmileDirectClub Inc. stock a price target range of $15.00 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 47.53% or -57.4%.

Earnings Forecast

Analysts estimate the earnings to decrease -78.60% in the current quarter to -$0.16, up from the -$0.89 reported in the same quarter a year ago. For the current year, earnings should grow to an average of -$0.74, down -16.10% from -$1.12 reported last year. Analysts also offered guidance for the next financial quarter, with their average projected EPS at between -$0.16 and -$0.08. Wall Street estimates earnings per share to be at an average of -$0.32 for the next year.

Insider Transactions Summary

According to SEC data, total insider shares purchases at the company stands at 13 over the last 12 months, while SEC filings reveal that there have been 2 insider sales over the same period. Insiders have purchases 310,645 shares while those sold by company executives and officers stand at 2,285,857. The last 3 months have seen insiders trade a total of 122,284 and 0 in purchases and sales respectively.

Oswald Kay, a President of International at the company, sold 10,000 shares worth $0.1 million at $10.04 per share on May 12. The Director had earlier bought another 53,000 SDC shares valued at $0.41 million on Aug 14. The shares were bought at $7.80 per share. WALLMAN RICHARD F (Director) bought 8,000 shares at $4.68 per share on Mar 16 for a total of $37439.0 while WALLMAN RICHARD F, (Director) bought 12,000 shares on Nov 26 for $0.12 million with each share fetching $9.60.

Peloton Interactive Inc. (NASDAQ:PTON), on the other hand, is trading around $83.67 with a market cap of $21.93B and analyst research firms have a positive stance on its shares. Analysts predict that the stock will reach $63.83 and spell out a less modest performance – a -31.08% return. Some analysts are even forecasting -$0.66 per share in earnings this year on a short term (1 year) basis.

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

Company balance sheet and cash flow

PTON’s operating expenses over the recent quarter were at $305.1 million. This represented a 41.84% of the company’s total revenues which amounted $524.6 million. With this in place, we can see that the company’s diluted EPS declined -$0.20 on the year-over-year period, shrinking to -$1.76 as given in the last earnings report.

In terms of the balance sheet & cash flow as of (Jun 2020), the total assets figure advanced to $2.57 billion from $2.58 billion over the previous quarter. Short term investments amounted to $923.7 million while total current assets were at $1.79 billion. The cash flow from operating activities totaled $49.1 million, significantly higher than the -$75.6 million reported in the year-ago quarter. The company’s free cash flow for the quarter was -$61.0 million.

Insider activity

Insiders have transacted a total of 21 times at Peloton Interactive Inc. over the last 6 months, with insider purchases undertaken 10 times and accounting for 10,582,445 shares. Insider sales totaled 8,124,685 shares over the same period, with these deals completed in 11 transactions. Looking at these numbers, we realize that net purchases over that period are -1.0 shares. Insiders now hold a total of 198.26k shares after the latest sales, with -100.60% net shares purchased.

Major holders

Insiders own 2.50% of the company shares, while shares held by institutions stand at 82.80% with a share float percentage of 205.91M. Investors are also buoyed by the number of investors in a company, with Peloton Interactive Inc. having a total of 255 institutions that hold shares in the company. The top two institutional holders are Baillie Gifford and Company with over 17.01 million shares worth more than $982.9 million. As of Jun 29, 2020, Baillie Gifford and Company held 8.26% of shares outstanding.

The other major institutional holder is FMR, LLC, with the investment firm holding over 16.28 million shares as of Jun 29, 2020. The firm’s total holdings are worth over $940.73 million and represent 7.90% of shares outstanding.