Argus Updates Equity Research Report Coverage of Dogness (International) Corp. (DOGZ)
Click here to view Full Argus Report
Highlights, as conveyed by Argus Analyst
- DOGZ: A leading developer and manufacturer of a comprehensive line of
Dogness-branded, OEM, and private-label pet products, with a record of innovation in the smart tech segment and a strong distribution network.
- In our view,
Dogness'successful execution of its business plan led the company back to profitability during the first half of fiscal 2021, which ended on December 31, 2020. Dognessbenefitted from a surge in demand related to increased pet ownership during the COVID-19 pandemic and increased momentum for its core product line, led by growing demand for smart pet products. Dognesscontinues to see strong product demand, particularly from its smart tech portfolio, and has expanded availability across multiple sales channels, including online, specialty stores, big box warehouse clubs, and general retail.
- We expect this momentum, which was evident during the 2020 holiday season, to continue, driven by new and expanding partnerships with leading
U.S.retailers including Target, Costco, and Petco. We also believe that favorable industry tailwinds (accelerated by people spending more time at home and adopting new pets during COVID-19) and the company's leadership in the faster-growing pet tech and smart pet product segments have contributed to the strong consumer demand. Dognessreported 7% revenue growth for the first half of fiscal 2021, reversing a negative trend seen since 2019, with growth in both the U.S.and domestic Chinamarket. Smart pet product sales increased 60% over the same year-ago period, and accounted for 27.6% of total revenue, compared to 18.4% in the comparable period in fiscal 2020, and 22.6% for the full 2020 fiscal year. As a result, gross margin for the first half of fiscal 2021 rose to 39%, levels not seen since 2018. Thus, we expect Dognessto continue its evolution into a higher-margin technology-focused pet product company with a diversified global footprint, and to capitalize on favorable long-term global trends in the pet care industry as pet owners return to offices and require mobile pet monitoring and care.
- As of
December 31, 2020, Dognesshad $2.3 millionin cash and short-term investments on its balance sheet. Subsequently, the company raised $7.4 millionin gross proceeds from an equity and warrant offering in January 2021. With its favorable outlook for sustained positive operational cash flow, we believe the company is capitalized sufficiently to execute on its business plan and build value for the company and shareholders.
- DOGZ shares are trading at roughly 7-times our EPS estimate of
$0.27for fiscal 2022. This forward multiple represents a steep discount to the average forward multiple of roughly 24-times for the S&P Small Cap 600 and the Russell 2000 benchmarks. In our view, the current valuation does not reflect Dogness'recent positive financial results, its strengthened balance sheet, growth initiatives, or continued favorable market trends. As such, we view the shares as having upside and, based on our forward P/E analysis, a fair value of $6.00.
INVESTMENT THESIS (click here to view full Argus Equity Research Report & Investment Thesis)
Headquartered in NYC,
Forward Looking Statements
No statement made in this press release should be interpreted as an offer to purchase or sell any security. Such an offer can only be made in accordance with the Securities Act of 1933, as amended, and applicable state securities laws. Certain statements in this press release concerning our future growth prospects are forward-looking statements regarding our future business expectations intended to qualify for the "safe harbor" under the Private Securities Litigation Reform Act of 1995, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding lingering effects of the COVID-19 pandemic on our customers' businesses and end purchasers' disposable income, our cooperation with telecom companies to secure 4G coverage, our ability to meet development, production and shipping targets, our ability to raise capital on any particular terms, fulfillment of customer orders, fluctuations in earnings, fluctuations in foreign exchange rates, our ability to manage growth, our ability to realize revenue from expanded operation and acquired assets in
View original content to download multimedia:http://www.prnewswire.com/news-releases/argus-updates-equity-research-report-coverage-of-dogness-international-corp-dogz-301315370.html
Argus Research Services Contact: Darrell Stone, 646-747-5438, email@example.com; Dogness Contact: David Pasquale, Global IR Partners, New York Office Phone: +1-914-337-8801, DOGZ@globalirpartners.com