Money & Markets Week Ahead for the week of August 2, 2021: A backyard BBQ staple will hit the market when the Weber IPO prices in the next few days.
I also preview General Motors Co.’s (NYSE: GM) upcoming earnings call.
Here’s more of what to watch in the week ahead on Wall Street:
On the IPO Front: Weber Inc.
There are several initial public offerings (IPO) on the calendar this week.
Weber Inc. plans to price its IPO on Thursday. It will list on the New York Stock Exchange under the ticker symbol WEBR.
What it is: Weber is based in Palatine, Illinois.
The company manufactures and sells outdoor gas, charcoal, electric and wood pellet grills.
According to its S-1/A filing with the Securities and Exchange Commission, Weber has experienced 10% compound annual growth since 1980.
In 2020, Weber generated $1.5 billion in net sales — up from the $1.3 billion the company reported in 2019.
In the three months ending March 31, 2021, the company reported total net sales of $963 million compared to $596 million reported in the same three months of 2020 — a 61.5% increase in net sales.
The company increased its year-over-year net income from $50.1 million in 2019 to $88.8 million in 2020.
The offering: The company plans to sell 46.9 million shares at a price range of $15 to $17 per share.
Weber is also granting underwriters the ability to purchase 7 million additional shares.
The intent is to raise around $712.5 million with the offering. The company said it will use the money to pay off its $220.1 million in debt and buy back shares from pre-IPO investors.
At $17 per share, Weber would see a market cap of $5 billion.
According to the prospectus, BDT Capital Partners owns a controlling stake of Weber and will retain 56% of voting control after the IPO launches.
Goldman Sachs, JPMorgan, Barclays, Citi, Wells Fargo Securities, Bank of America Securities, UBS Investment Bank, BMO Capital Markets and KeyBanc Capital Markets are all bookrunners on the deal.
The skinny: I like how Weber Inc. sets up financially.
It’s had strong year-over-year growth in net sales and net income — including in 2020 where it benefitted from the acceleration of “certain trends that benefitted our industry.”
Weber offers a broad range of grills and grill accessories and has become a global leader in the industry.
While I’m not fond of investing in IPOs right out of the gate, I think Weber has a lot of potential even after the dust from its IPO settles.
Earnings Deep Dive: General Motors Co.
We are into the meat of earnings season, and there are plenty of big names reporting quarterly numbers in the coming week.
I’ll focus on a stalwart of the American auto industry, General Motors Co. (NYSE: GM).
The automaker’s earnings call falls on Wednesday.
GM isn’t known to fall short of expectations. The automaker hasn’t fallen short of earnings-per-share estimates since the second quarter of 2015.
And the quarters following the COVID-19 crash in March 2020 have been impressive as far as beats go. GM more than doubled expectations in 2021 Q1 when it reported $2.25 earnings-per-share growth compared to analysts’ forecast of $1.05 EPS. That was almost 30 cents higher than the previous quarter as well.
Revenue is a bit of different story.
GM fell short of revenue expectations last quarter, reporting $32.5 billion against the forecasted $33 billion.
In the fourth quarter of 2020, the automaker met expectations at $37.5 billion, and it barely beat Wall Street projections in the quarter before that.
The skinny: GM’s stock has been a top performer of the auto industry in 2021 with gains topping 40% year-to-date.
It will be interesting to see what the company reveals about its electric vehicle efforts in its earnings call Wednesday. The automaker is focused on becoming a leader in the EV and autonomous driving field, and it should have a major impact on its share price going forward. It has faced some recent setbacks including another recent recall of its problematic Chevrolet Bolt EV model due to a battery defect causing fires.
In the short term, pay attention to what GM says about supply lines. Auto manufacturers are dealing with a major semiconductor shortage due to the COVID-19 interruption, and its put a damper on production.
HSBC Holdings plc (NYSE: HSBC)
Simon Property Group Inc. (NYSE: SPG)
Alibaba Group Holdings Ltd. (NYSE: BABA)
Eli Lilly and Co. (NYSE: LLY)
ConocoPhillips (NYSE: COP)
Activision Blizzard Inc. (Nasdaq: ATVI)
Toyota Motor Corp. (NYSE: TM)
CVS Health Corp. (NYSE: CVS)
General Motors Co. (NYSE: GM)
Kraft Heinz Co. (NYSE: KHC)
Moderna Inc. (Nasdaq: MRNA)
Square Inc. (NYSE: SQ)
Regeneron Pharmaceuticals Inc. (Nasdaq: REGN)
Dominion Energy Inc. (NYSE: D)
Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH)
Note: Next week, I will turn this article over to our assistant managing editor, Chad Stone. I will continue to focus on providing safe, sound, smart and simple profitable investment information as well as research and analysis for Adam and Charles. Rest assured, Chad knows his stuff and will continue to give you the insights you need to be ready for the next trading week. — Matt
Matt Clark, CMSA®
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He is a certified Capital Markets & Securities Analyst with the Corporate Finance Institute and a contributor to Seeking Alpha. Prior to joining Money & Markets, he was a journalist and editor for 25 years, covering college sports, business and politics.