Argus Updates Equity Research Report Coverage of Dogness (International) Corp. (DOGZ); Sees $4 Fair Value Estimate for DOGZ S...
December 16 2020 - 08:00AM
Argus Research, an independent investment research firm, continues
its Equity Research Report coverage on
Dogness
(International) Corporation (NasdaqGM: DOGZ)
Click here to view
Full Argus Report
Highlights, as conveyed by Argus Analyst Steve Silver,
include:
COMPANY HIGHLIGHTS
DOGZ: A leading developer, manufacturer and distributor of
Dogness-branded, OEM and private label pet products, with a track
record of innovation in the smart tech segment.
- In our view, Dogness has continued to
execute despite a challenging fiscal 2020, and is well positioned
to return to profitability in fiscal 2021. We expect favorable pet
market trends, accelerated by people spending more time at home as
a result of COVID-19, to continue in fiscal 2021, with an abatement
of headwinds, including a trade dispute between China and the
United States, which has resulted in higher export tariffs and
reduced sales in the United States.
- During the first half of fiscal 2021,
Dogness has leveraged its sales, marketing and distribution
relationships with leading specialty, brick & mortar, mass
market and online/e-commerce companies. These include Petco, Chewy,
Amazon, Walmart, Costco, Target, Sam’s Club, Wayfair, and JD.com,
among others.
- The Company also opened a new
manufacturing factory in China, integrating key operating and
management functions, along with implementing the latest in
technology developments.
- In aggregate, this should help Dogness
to enhance its long-term sales and gross-margin profile. Indeed, we
expect Dogness to 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.
- Sales of the smart pet product line,
which launched in calendar 2018 and includes connected collars,
harnesses, feeders, and play robots, totaled $4.3 million in fiscal
2020, more than double prior-year results. The unit accounted for
22.6% of total sales during fiscal 2020, compared with just 8% in
fiscal 2019.
- As of June 30, 2020, Dogness had
approximately $4.8 million in cash and short-term investments on
its balance sheet. We anticipate Dogness will return to positive
operational cash flow during fiscal 2021, but think the company
could raise capital during the year on more favorable terms, as its
recovery takes hold.
-
DOGZ shares are trading at roughly 9-times our EPS estimate of
$0.23 for fiscal 2022. In our view, the current valuation does not
reflect Dogness’ recent initiatives to help drive enhanced revenue
and margin expansion, and the significant accelerated growth of the
pet market due to COVID-19. We view the shares as having upside
and, based on our forward P/E analysis, a fair value of $4.00.
INVESTMENT THESIS (click here
to view full Argus Equity Research Report & Investment
Thesis)
About Dogness (International) Corporation (NasdaqGM:
DOGZ) www.dognesspet.com or ir.dogness.com
Dogness (International) Corporation was founded
in 2003 from the belief that pet dogs and cats are important,
well-loved family members. Through its smart products, hygiene
products, health and wellness products, and leash products, Dogness
is able to simplify pet lifestyles, make them more scientific, and
enhance the relationship between pets and pet caregivers. The
Company ensures industry-leading quality through its fully
integrated vertical supply chain and world-class research and
development capabilities, which has resulted in over 200 patents
and patents pending. Dogness products reach families worldwide
through global chain stores and distributors.
DOGZ Contacts:
Investor Relations contact:
David PasqualeGlobal IR
Partnersdpasquale@globalirpartners.comOffice: +
1-914-337-8801
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Argus Research Co. has received a flat fee from the company
discussed in this report as part of a Sponsored Research agreement
between Argus and the company. No part of Argus Research’s
compensation is directly or indirectly related to the content of
this assessment or to other opinions expressed in this report.
Please refer to the full Argus report and the disclaimer for
complete disclosures.
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