ToughBuilt (TBLT) Has a High Growth Rate in the $460B DIY Sector.
Good day, everyone,
We are continuing coverage of ToughBuilt Industries, Inc. (NASDAQ: TBLT), a company that makes tool and construction accessories.
Following a broader market sell-off TBLT has pulled back to $1.36 from $1.52, things appear to be stabilizing now.
Current price $1.36/share
TBLT shares gapped at the open today from $1.30 to $1.34/share. In the first two hours of trading TBLT shares were as high as $1.52/share. Trading volume was 6.5M as investors continue to accumulate shares.
Visit the ToughBuilt Store on Amazon where there are 64 items listed. All the items seem reasonably priced, look to be of good quality, and all have 4 stars or better ratings. Eight of the items have the red warning that only a few were left in stock.
Running low on hot products is a mixed blessing. It’s great to see some of the products “flying off the shelf” creating strong revenues but at the same time, consumers get disappointed when the product they want isn’t available. This is a common issue with companies experiencing a rapid growth phase.
In December, the company announced the launch of soft sided tool organization products, consisting of 4 hard body bags, 10 CLIPTECH pouches and accessories, at Lowes stores nationwide. A few weeks later TBLT announced the launch of 11 Cutting products consisting of Shears, Knives and Aviation Snips, at Lowe’s. That’s a total of 25 new products added to their presence at Lowes in just one month.
We’re not marketing experts, but common sense tells us that ToughBuilt products may have been selling well at Lowes if they allowed 25 more products to be added at their stores.
The analysts covering TBLT estimate 2021 revenues at $61.2M and we believe that figure could be low. We reason that the 2020 revenues estimated by the analysts are at $41.9M so they are projecting a 46% increase YOY.
The company already had $27.4M in revenue through the 9 months ending Q3 2020 with Q3 2020 revenue alone at $16.6M, if the company only matched that revenue in Q4 the FYE 2020 total would be $44M.
Look to the future and develop your own opinion of where this juggernaut may be going. When we do that, we see a company in a $460 billion sector, with the potential for hundreds of millions in revenue.
Stay tuned and stay informed,
The Traders News Group
Original report below issued 01/25/21 9:30 AM EST
Toughbuilt (TBLT) Shares on Fire This Month!
Good day, everyone,
We are initiating coverage of ToughBuilt Industries, Inc. (NASDAQ: TBLT), a company that makes and sells tools and construction accessories.
Recent Earnings and Product Launches
December 22nd, 2020 – TOUGHBUILT LAUNCHES 11 NEW HAND TOOLS AT LOWE’S
December 7th, 2020 – TOUGHBUILT LAUNCHES 14 NEW TOOL ORGANIZATION SKUs AT LOWE’S NATIONWIDE
November 9th, 2020 – TOUGHBUILT ANNOUNCES RECORD THIRD QUARTER 2020 FINNACIAL RESULTS
Current price $1.30/share
Outstanding shares (est.) 52.34M
Shares in float (est.) 38.16M
Revenues (ttm) $31.94M
52-week range $.621 to $2.95/share
The company sells tool pouches, tool rigs, tool belts and accessories, tools bags, totes, various storage solutions, office organizers/bags for laptop/tablet/cellphones, and kneepads. They also sell sawhorses, miter saws, table saws, roller stands, jobsite tables and gloves to name a few of their products.
TBLT shares are hot right now. If we look at the stock chart we see the shares have gained over 60% thus far in January. That’s a nice gain but why would we want to report to you on a company that just gained 60%? We believe TBLT shares have just begun a long term upward move and here is why.
Broke past their 50 DMA and 200 DMA of $.88 and $.89, respectively.
SMA 20 +33.89%
SMA 50 +50.25%
SMA 200 +46.51%
52-week high is $2.95/share.
Accumulation, or a rise in average daily shares traded in concert with price appreciation.
Why are TBLT shares so hot right now? The company had a good Q3 2020 earnings report indicating a big jump in revenues and profits (see below), their first profitable quarter. We believe investors are anticipating the company’s Q4 and FYE 2020 earnings report and may be thinking the numbers could show a continuation in this trend.
Q3 2020 Results
Net sales for three-month period ended September 30, 2020 were $16.6 million, an increase of 248% from $4.7 million for the same period in 2019.
Gross profit increased by 410% to $7.5 million for the three months ended Sept 30, 2020, from $1.4 million in the same period in 2019.
Income from operations for the three months ended Sept 30, 2020 was $335,000, compared to a loss of $2.4 million for the same period in 2019.
Net Income was $120,000 for the three months ended Sept 30, 2020, compared to a net loss of $2.6 million in the same period in 2019.
Gross sales through its U.S. & Canadian Amazon storefronts were $2,070,000.
TBLT started in 2013 and had $1M in sales that year and sales have grown every year since. In addition to Amazon, in the past year the company has added Lowes and Home Depot to its distribution system. You can also find their products at Menards and Tractor Supply Company. A large part of the TBLT market is the DIY/home improvement consumer, a market valued at $460B.
Once again, we want to circle back to the Q4 2020 earnings release. The company has a FYE of December 31st and if they follow their norm, we could see those Q4 numbers in the next 2-3 weeks. The revenue numbers will include the holiday shopping season results and Q4 revenues could have increased dramatically.
TBLT only has 24 employees. Their products are manufactured outside the company. Those two dozen employees are engaged in the design, engineering, and distribution of the products. That means the company is generating over $1.2M per employee based upon the TTM revenues of $31M. That is an impressive figure.
If TBLT were to remain at its current market cap of $68M and show 2020 revenues of $40M (we think it may be higher) that would yield a price/sales ratio of 1.70X which could be too low. A more acceptable P/S ratio would be 3.0X which could support a market cap of $120M or $2.29/share.
While TBLT is not generating enough income as of Q3 2020 to support a respectable P/E ratio and higher stock pricing levels, most stocks trade based on future revenues. The company consistently operates with a gross margin over 40% and they only have 24 employees. If they can eliminate “growing pains” expenses from their income statement, they have a formula for significantly higher profits.
It appears a number of investors are betting the TBLT Q4 2020 earnings release will be a catalyst and are creating some momentum here. Could we see blowout earnings?
We will have more on TBLT soon,
The Traders News Group
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