Why Nautilus inventory was up 35% in January

What happened

Shares of nautilus (NYSE: NLS) According to S&P Global Market Intelligence, it gained 35.1% last month. The manufacturer of classic workout brands such as Bowflex, Schwinn and Universal has further expanded its product range, which integrates its personalized digital fitness platform JRNY.

After launching the Bowflex T7 and T10 treadmills in December, the company announced the release of the T22 treadmill and the Bowflex Max Trainer M9 cardio machine in January.

Image source: Getty Images.

so what

The rise of Peloton Interactive (NASDAQ: PTON) got established players like Nautilus to improve their game. Nautilus posted a 152% year-over-year revenue increase in the third quarter that the company attributed to changes in exercise habits during the COVID-19 pandemic.

The investments in new products indicate a permanent change in consumer behavior. Peloton announced in December that it would acquire Precor for $ 420 million to expand its manufacturing capacity and meet growing demand for fitness options for the home.

Likewise, Nautilus has recently increased manufacturing and supply chain capacity, including increasing production for bicycles by five times and expanding capacity for power products by two to three times.

What now

Nautilus expects full-year 2020 revenue of between $ 540 million and $ 565 million, a 78% growth over 2019, a challenging year for the company. For earnings per share, analysts expect Nautilus to post $ 2.30, a significant improvement over the previous year’s loss of $ 0.70.

It is clear that investors do not expect the increased demand to continue. Nautilus shares are trading at a low P / E ratio of 11.6 times the expected result for 2020. That may seem attractive to value investors, but nobody really knows exactly how long this demand trend will last after the end of the pandemic, so one lower rating might be justified.

However, networked fitness platforms integrate streaming content such as music and even third-party services such as Netflix to keep users busy with their machines. Nautilus’ JRNY platform uses machine learning that delivers personalized experiences to users and could prove to be stickier than investors think.

We’ll know more when Nautilus releases fourth quarter results on February 22nd.

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