It is certainly not a company or industry you would expect to buy shares of, but 1-800 (NASDAQ:FLWS) was a company that did surprisingly well throughout the COVID-19 pandemic. The flower delivery firm based out of New York was officially founded in 1982 although the dot com naming scheme was not added on to the name until 1995, when the company officially changed from a phone service to an internet one. When you think about it that way, 1-800 is an online delivery pioneer and although it only has a market cap of just over $1 billion, it is considered one of the leaders in the online flower delivery industry.
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Shares performed as well as you could imagine throughout the COVID-19 pandemic in 2020, and has a 52-week trading range of $17.78 to $39.61 per share. The stock has returned nearly 35% to its shareholders over the past 52-weeks, but has lagged the benchmark S&P 500 index by about 8% during that time. 1-800 is set to report its FY Q3 earnings on April 29th, and investors will perhaps be more interested in how the company perceives its business to grow as the U.S. reopens its economy.
The Bullish Case: It is an interesting industry to analyze with very few major players which could be an advantage for 1-800 The brand has some significant strength and has become synonymous with ordering flowers or gift baskets for people, which does give the company an industry moat of sorts. Perhaps the most bullish part of a company like this is a return to normalcy in the world, especially with upcoming holidays like Mother’s Day which is usually one of its biggest days of the year. 1-800 has a growing stable of subsidiaries which include 1-800, Harry and David, Cheryl’s Cookies,, and the Popcorn Factory.

The Bearish Case: As with any online delivery service, you just have to ask yourself if one of the big players like Amazon (NASDAQ:AMZN) will completely wipe this company out. According to its website, 1-800 had $1.49 billion in total revenue in FY2020, but only managed to report $65 million in total net income, so it seems as though selling and delivering flowers is a low margin business. How much growth can reasonably be expected? It boasted 8.8 million customers, but the 52% repeat customer conversion seems low for such a concentrated industry. Investors looking for high growth probably will not find it here!

Final Verdict on 1-800 : The company fills a niche industry, but it seems like it could inevitably lose business to Amazon or any other delivery company that decides to get into the space. The one bright spot for the stock is that the median analyst price target remains at $42.71 per share, which represents a staggering 75% upside from today’s trading levels. Still, this is neither a high growth company nor high growth industry, so for those seeking larger gains, they would be best advised to look elsewhere.

Über den Autor

Sebastian Seiler

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