AI-based stock forecast declares FOXF as a strong buy, resulting in 25% profit from an accurate prediction of the 4Q22
Fox Factory Holding Corp (FOXF), is an American company headquartered in California that specializes in the design, development, and manufacturing of high-performance suspension systems and components primarily for mountain bikes, off-road vehicles, and trucks. The company has been operational since 1974 and has since carved a niche for itself in the market by supplying top-notch products that meet the needs of the most discerning customers. Below is our stock prediction from our quarterly stock forecast (90 days) publicly announcing FOXF as a strong buy on December 22nd, 2022 to our subscribers getting exclusive market insights based on artificial intelligence. Subscribers who bought FOXF stock based on our AI forecast on this date generated a profit of 25.02%.
FOXF Overview
In addition, FOXF has a vast customer base, including original equipment manufacturers, distributors, and retailers who value the company's commitment to quality, reliability, and innovation. That said, no company is immune to challenges, and FOXF is no exception. One of the significant challenges the company faces is increased competition from rival firms that offer similar products at lower prices. The suspension systems and components market is highly competitive, with numerous players offering similar products. FOXF faces intense competition from well-established firms such as SRAM, RockShox, and Manitou, among others. These firms offer comparable products at lower prices, which can make it challenging for FOXF to maintain its market share and profitability.
Secondly, the global economic slowdown and disruptions in the supply chain have had adverse effects on FOXF's operations. The COVID-19 pandemic caused significant disruptions to global supply chains, leading to shortages of critical raw materials and components. As a result, FOXF has experienced difficulties in sourcing materials, which has affected its production capacity, leading to reduced revenues and profit margins.
Thirdly, FOXF is reliant on raw materials such as aluminum, steel, and rubber, among others, to manufacture its products. Any price changes or supply chain disruptions in the procurement of these materials can adversely affect FOXF's operations and profitability. For example, the price of aluminum has been volatile in recent years, with fluctuations affecting the company's production costs and profit margins.
FOXF to Acquire Custom Wheel House, LLC
FOXF recently announced that its subsidiary, Fox Factory, Inc., has signed a definitive agreement to acquire Custom Wheel House, LLC (“CWH”) from Thompson Street Capital Partners and other sellers for a purchase price of $131.6 million. The transaction is expected to close late in the first quarter of 2023, subject to customary closing conditions, and to be accretive to the Company’s fiscal 2023 financial results.
CWH is a leading designer, marketer, and distributor of high-performance wheels, performance off-road tires, and accessories, with a family of brands that includes premier flagship brand Method Race Wheels, Tensor Tire, and GMZ Race Products. This acquisition is complementary to FOX’s up fitting and lift kit business and further broadens its product offering in a growing segment of the automotive industry.
The acquisition of CWH is expected to create a unique opportunity for Fox Factory to meaningfully increase the Company’s addressable market and reinforce its vertical integration strategy. With the addition of CWH and its brands, FOX is expected to broaden and diversify its range of aftermarket vehicle offerings. CWH’s established manufacturing footprint and supplier network are expected to allow the team to seamlessly integrate into FOX’s aftermarket portfolio, providing the ability to scale up quickly to meet customer demand and drive cost efficiency.
The transaction also adds a proven executive team, with deep industry experience and a track record of strong growth and operating results, to FOX’s Powered Vehicles Group. The acquisition reflects FOX’s commitment to strategic investments, which is another example of FOX’s disciplined, accretive merger and acquisition strategy to diversify revenue streams, broaden the product platform, and drive growth and profitability.
As FOX continues to push the limits of ride dynamics, expanding the Company’s expertise from suspension to wheels and tires is a natural evolution. The acquisition of CWH presents a substantial vertical integration and collaborative opportunity for FOX. FOX welcomes the experienced Custom Wheel House leadership team and believes they will play an integral part in the Company’s growth going forward.
The acquisition of CWH is a compelling strategic and financial transaction that bolsters FOX’s leadership position in an attractive market, creates a dedicated supplier, adds an experienced leadership team with a strong track record, and reflects FOX’s commitment to strategic investments. FOX’s past value-enhancing acquisitions include Ridetech, Tuscany Motor Company, Race Face/Easton Cycling, Sport Truck USA, SCA, Outside Van, SOLA Sport, and Shock Therapy. The Company will provide updated guidance on its May earnings call post-acquisition close.
FOXF 4Q22 & Fiscal 2022 Financial Results
FOX Factory Holding Corp. (FOXF) has released its financial results for the fourth quarter and fiscal year ending December 30, 2022. FOX's financial results for the fourth quarter and fiscal year ending December 30, 2022, are impressive, with significant increases in sales, gross profit, and adjusted net income. The acquisition of Custom Wheel House, LLC, provides additional market diversification and significant vertical integration for FOX. The company's future success will depend on its ability to navigate the challenges posed by inflationary pressures and tightening monetary conditions in the global economy. Nevertheless, FOX's achievements in 2022 provide confidence in its ability to execute its tactical objectives and deliver on its long-term strategic vision.
“Thanks to a strong finish in the fourth quarter, FOX had another record year for both revenue and earnings in 2022. Our team stayed focused on our mission, leveraging our diverse portfolio to combat supply chain and labor constraints, as well as threats from inflation..."
- Mike Dennison, Chief Executive Officer of FOXF The company reported sales of $408.6 million, a 19.4% increase from the same period in the previous fiscal year, driven by a 38.5% increase in Powered Vehicles Group sales and a 1.9% decrease in Specialty Sports Group sales. Gross profit increased by 22.0% to $130.9 million, and gross margin percentage increased 70 basis points to 32.0% compared to the same period last fiscal year. Net income was $53.0 million, or $1.25 of earnings per diluted share, compared to $37.7 million, or $0.89 of earnings per diluted share in the same period last fiscal year. Non-GAAP adjusted net income was $60.8 million, or $1.43 of non-GAAP adjusted earnings per diluted share, compared to $44.8 million, or $1.06 of non-GAAP adjusted earnings per diluted share in the same period last fiscal year. Adjusted EBITDA was $76.8 million, or 18.8% of sales, compared to $61.1 million, or 17.8% of sales in the same period last fiscal year.
The increase in sales was primarily due to increased demand in the OEM channel and strong performance in fitting product lines in the Powered Vehicles Group. The increase in gross margin was mainly due to efficiencies gained at the Gainesville, Georgia facility and strong performance in the up-fitting product lines. The company experienced higher employee headcount and benefit-related costs, higher insurance and facility-related expenses, and higher commission costs, leading to total operating expenses of $74.2 million in the fourth quarter of fiscal 2022. Non-GAAP operating expenses were $66.1 million, or 16.2% of sales in the fourth quarter of fiscal 2022, compared to $56.9 million, or 16.6% of sales in the same period last fiscal year.
In addition, as mentioned in the previous section, the acquisition of Custom Wheel House, LLC, a company that designs, markets, and distributes high-performance wheels, performance off-road tires, and accessories, including the premier flagship brand Method Race Wheels. This acquisition provides additional market diversification and significant vertical integration for the lift kit and up-fitted truck business of FOX.
Looking forward, FOX is aware of the challenges posed by inflationary pressures and tightening monetary conditions in the global economy, and the company plans to fine-tune its product lines and explore investments to ensure its future success. The company's achievements in 2022 provide confidence in its ability to execute its tactical objectives and deliver on its long-term strategic vision. Therefore, FOX has introduced fiscal 2023 guidance and expects sales to be between $1.7 billion and $1.8 billion and earnings per diluted share to be between $5.00 and $5.25.
FOXF 90-Day Stock Prediction
Our AI-based stock forecast on Dec 22nd, 2022, declared FOXF as a strong buy, resulting in a 25.02% profit for subscribers who purchased the stock based on our exclusive market insights. This prediction was available in multiple forecasts during December 2022 and other time frames. As a subscriber, you can identify more opportunities by monitoring regularly recurring stock picks in the AI predictions. Another sign is stock picks appearing in several anticipated time periods, especially in daily predictions released each morning EST. One of the main advantages of using AI for stock analysis is its ability to objectively study a large number of assets throughout the day. By integrating big data analytics with our AI prediction system, we can enhance decision-making, forecasting, result modeling, and market understanding. The benefits growthtech.ai subscribers take advantage of include:
Increased accuracy: AI algorithms can process vast amounts of data quickly and accurately, which can lead to more accurate predictions and better decision-making.
Faster decision-making: Since AI algorithms can process large amounts of data much faster than humans, they can help investors make informed decisions in real-time.
Objective analysis: AI algorithms can analyze data objectively and without biases, which can lead to more objective investment decisions.
Risk management: AI can help identify potential risks in investments and portfolios, allowing investors to manage risks more effectively.
Improved efficiency: AI can automate many tasks involved in stock market analysis, such as data collection and analysis, freeing up time for investors to focus on other tasks.
Adaptability: AI algorithms can adapt to changing market conditions and adjust their predictions accordingly, which can lead to more accurate and relevant insights.
Overall, artificial intelligence can provide many benefits to investors, including improved accuracy, faster decision-making, objective analysis, risk management, improved efficiency, and adaptability.
We offer 4 packages you can choose from. From the Top 5 to the Top 30, subscribers get advanced notifications of upcoming market opportunities. Bigger forecasts also come with more enhanced features. Generally, we advise a larger forecast because it provides much more market coverage, makes it much easier to follow trends, and of course, you will certainly find A LOT more market opportunities. Not only does the growthtech.ai analytics give you stock recommendations but it also gives you Signal Confidence (SC). Based on the historical accuracy of each prior financial asset forecast as well as current market variables important to stock price, the AI system calculates the Signal Confidence (SC), which is stated as a percentage out of 100%. In this stock prediction, the Signal Confidence (SC) is 73%.
Our AI-driven stock prediction system conducts an in-depth analysis of historical financial market anomalies attributed to trader overreaction and underreaction, generating daily forecasts in various timeframes. Every day, you will be updated with the best potential stock opportunities identified by AI that are offered from the short-term to longer-term time frames
Typically, long-term forecasts are more precise, and they generate greater profits, which is why our AI trading signals are optimal for value-based investors. When combined with machine learning, these incredibly intricate mathematical functions for statistical programming and modeling are capable of comparing their current coefficients and algorithms to newly added data and then adapting to improve the models' accuracy through a process of validation and reflection.
Stock Ticker | Open: Dec 22, 2022 | Close: Mar 22, 2023 | ROI% |
Fox Factory Holding Corp. (FOXF) | $92.53 | $115.68 | 25.02% |
As previously noted, this stock received several recommendations throughout a range of time intervals.
Remember to always exercise discretion when studying the market. Prior to putting any financial plans into action, you should always conduct your own due diligence and seek assistance from a licensed financial advisor.
Enhanced Market Intelligence
Finding market opportunities is made easier by using our AI system. It doesn't tell you what to do. It tells you where to look. Our skilled team of analysts carefully verifies the AI outputs and enhances this market research with a human touch, providing our subscribers with enhanced market intelligence. If you would like the AI advantage working for you, then you should subscribe today!
Life is better when you can be bullish.
Sources: 1. FOX Factory Investor Relations, "Fox Factory Holding Corp. Announces Definitive Agreement to Acquire Custom Wheel House, LLC, a Leading Designer, Marketer, and Distributor of High-Performance Wheels, Performance Off-Road Tires, and Accessories" (2023)
2. FOX Factory Investor Relations, "Fox Factory Holding Corp. Announces Fourth Quarter and Fiscal 2022 Financial Results" (2023)
Comments