Holley (HLLY) AI Stock Analysis

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Holley

(NYSE:HLLY)

55Neutral

Holley presents a stable financial structure with no debt, but faces significant challenges in profitability and revenue growth. The technical analysis indicates a bearish trend, suggesting potential further downside. Valuation appears moderate with room for improvement if operational gains are realized. The earnings call provides cautious optimism with operational improvements, though macroeconomic challenges persist. Overall, Holley exhibits potential if it can capitalize on operational efficiencies and market opportunities, but risks remain.

Positive Factors

Business Expansion

Holley's direct-to-consumer business hit the $100 million sales milestone.

Business Strategy

Management has increased new product development capital expenditures, indicating a focus on innovation and growth.

Earnings

Holley Performance Brands delivered Q4 results that exceeded expectations, with sales approximately 2% above consensus and profitability posting a significant beat.

Negative Factors

External Risks

Management is closely monitoring tariffs and has mitigation strategies in place, indicating preparedness to handle potential risks.

Market Conditions

FY25 guidance reflects a soft macro environment, which poses challenges despite the company's core product focus and reinvestment efforts.

Market Performance

The market was down between 5% to 7% in 2024, according to the company.

Holley (HLLY) vs. S&P 500 (SPY)

Market Cap

$285.28M

Dividend YieldN/A

Average Volume (3M)504.77K

Price to Earnings (P/E)18.6

Beta (1Y)1.31

Revenue Growth-8.71%

EPS Growth-219.32%

CountryUS

Employees1,467

SectorConsumer Cyclical

Sector Strength63

IndustryAuto - Parts

Share Statistics

EPS (TTM)-0.20

Shares Outstanding118,865,190

10 Day Avg. Volume417,784

30 Day Avg. Volume504,769

Financial Highlights & Ratios

PEG Ratio0.04

Price to Book (P/B)N/A

Price to Sales (P/S)0.50

Price to Cash Flow (P/CF)18.40

P/FCF Ratio44.80

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$4.83

Price Target Upside101.25% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering8

Holley Business Overview & Revenue Model

Company DescriptionHolley Inc. (HLLY) is a leading manufacturer and marketer of high-performance automotive products. The company operates in the automotive aftermarket industry, focusing on the design, production, and distribution of high-performance car parts and accessories. Holley's core products include carburetors, fuel injection systems, engine tuning kits, exhaust systems, and other performance-enhancing components that cater to automotive enthusiasts and professional racers.

How the Company Makes MoneyHolley Inc. generates revenue primarily through the sale of its high-performance automotive parts and accessories. The company markets its products directly to consumers via its e-commerce platform and through a network of independent distributors and retailers. Key revenue streams include sales from its performance products like carburetors and fuel systems, which are popular among car enthusiasts looking to enhance vehicle performance. Additionally, Holley has established partnerships with automotive racing teams and events, which help to bolster its brand reputation and visibility within the racing community. This, in turn, drives sales growth. The company also benefits from a diverse portfolio of brands under its umbrella, allowing it to reach a wide range of customers across different segments of the automotive aftermarket industry.

Holley Financial Statement Overview

Summary

Holley's financial performance presents a mixed picture. The income statement reveals significant challenges due to declining revenue and net income, negatively impacting profitability. However, the balance sheet is strong with no debt, indicating financial stability, though asset management concerns exist. Cash flow generation shows resilience, but declining operating cash flow is worrying. Overall, financial structure is stable but operational performance is under pressure.

Income Statement

Neutral

Holley's income statement shows a decline in revenue over the TTM period, with a significant decrease in net income, resulting in a negative net profit margin. The gross profit margin remains relatively stable, but operating margins have contracted. The revenue growth rate is negative compared to the previous year, indicating challenges in sales performance. Overall, profitability is under pressure, affecting the score negatively.

Balance Sheet

Positive

The balance sheet reflects a strong equity position with no total debt in the TTM period, improving the debt-to-equity ratio significantly. The equity ratio is relatively healthy, indicating a stable financial structure. However, the decrease in total assets and stockholders' equity compared to the previous year highlights potential concerns over asset management and shareholder value.

Cash Flow

Neutral

Cash flow from operations has decreased compared to the previous year, but the company maintains positive free cash flow. The free cash flow to net income ratio is favorable, indicating efficient cash generation relative to earnings. However, the overall cash position is weakened by declining operating cash flow, impacting the score moderately.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
602.22M	659.70M	688.41M	692.85M	504.18M
	Gross Profit
238.54M	256.09M	253.66M	286.81M	208.24M
	EBIT
14.67M	94.04M	50.74M	126.98M	85.45M
	EBITDA
54.10M	117.51M	148.95M	152.47M	104.42M
	Net Income Common Stockholders
-23.23M	19.18M	73.77M	-27.14M	32.86M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
56.09M	41.08M	26.15M	36.33M	71.67M
	Total Assets
1.13B	1.20B	1.25B	1.19B	1.07B
	Total Debt
557.91M	615.46M	655.67M	637.67M	674.99M
	Net Debt
501.82M	574.38M	629.52M	601.35M	603.31M
	Total Liabilities
712.17M	762.19M	833.65M	888.57M	824.95M
	Stockholders Equity
421.15M	441.15M	415.99M	304.49M	240.38M
Cash Flow		Free Cash Flow
40.09M	82.16M	-390.00K	6.71M	78.93M
	Operating Cash Flow
46.90M	88.09M	12.31M	21.58M	88.41M
	Investing Cash Flow
2.02M	-4.45M	-25.04M	-134.09M	-165.62M
	Financing Cash Flow
-34.60M	-69.01M	2.85M	77.16M	140.54M

Holley Technical Analysis

Technical Analysis Sentiment

Negative

Last Price2.40

Price Trends

50DMA

2.72

Negative

100DMA

2.80

Negative

200DMA

3.00

Negative

Market Momentum

MACD

-0.03

Negative

RSI

47.40

Neutral

STOCH

60.48

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HLLY, the sentiment is Negative. The current price of 2.4 is below the 20-day moving average (MA) of 2.53, below the 50-day MA of 2.72, and below the 200-day MA of 3.00, indicating a bearish trend. The MACD of -0.03 indicates Negative momentum. The RSI at 47.40 is Neutral, neither overbought nor oversold. The STOCH value of 60.48 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HLLY.

Holley Risk Analysis

Holley disclosed 57 risk factors in its most recent earnings report. Holley reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Holley Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DORM	75 Outperform	$3.54B	18.85	15.44%	―	4.11%	50.07%
AZO	73 Outperform	$61.11B	24.50	-14.95%	―	4.72%	4.69%
LKQ	71 Outperform	$10.68B	15.79	11.33%	2.91%	3.53%	-25.71%
ORLY	70 Outperform	$79.56B	34.18	-174.09%	―	5.67%	5.40%
Sector *	59 Neutral	$11.20B	10.09	-1.41%	3.96%	1.31%	-16.95%
HLLY	55 Neutral	$285.28M	18.60	-5.39%	―	-8.71%	-219.32%
AAP	45 Neutral	$2.09B	59.62	-23.45%	2.86%	-9.34%	-852.37%

* Consumer Cyclical Sector Average

Performance Comparison

HLLY

Holley

2.40

-2.04

-45.95%

AAP

Advance Auto Parts

35.01

-41.61

-54.31%

AZO

AutoZone

3,653.24

577.15

18.76%

DORM

Dorman Products

115.85

20.03

20.90%

LKQ

41.29

-8.72

-17.44%

ORLY

O'Reilly Auto

1,389.87

282.63

25.53%

Holley Earnings Call Summary

Earnings Call Date: Mar 11, 2025 | % Change Since: 0.00% | Next Earnings Date: May 8, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed picture with significant achievements in operational improvements, digital growth, and margin enhancements. However, these were counterbalanced by sales decline, consumer confidence challenges, and a net loss due to impairment charges. Overall, the company has made substantial progress but continues to face demand and macroeconomic challenges.

Highlights

Digital and Consumer Experience Growth

Direct to consumer business experienced substantial year-over-year growth of 8%, driven by capturing market share through improved consumer experiences and digital capabilities.

Operational Improvements and Cost Reduction

Achieved significant operational improvements including debt reduction, a 22% year-over-year reduction in past dues, and cost savings of $7.8 million in 2024.

B2B and National Retailer Channel Success

Year-over-year growth in 17 brands across all channels, with a 12% growth in the national retailer channel and enhanced support covering 80% of B2B volume.

Margin and EBITDA Improvements

Gross margins improved by 690 basis points year-over-year to 45.6% in Q4, and EBITDA margins increased by 250 basis points to 20.8%.

Expansion into Mexico

Expanded into Mexico through direct to distributor relationships, opening new opportunities in the Mexican market.

Product Innovation and Launches

Launched several key products in Q4, including engine swaps and new safety portfolio offerings, contributing to a 75% increase in new product revenue per SKU.

Free Cash Flow and Debt Reduction

Generated $42 million in free cash flow for 2024 and prepaid $25 million on the term loan, leading to credit upgrades from Moody's and S&P.

Lowlights

Net Sales Decline

Net sales decreased by 10% to $140.1 million for Q4 compared to the prior year, driven by reseller destocking and macroeconomic headwinds.

Consumer Confidence and Demand Challenges

Cautious outlook due to softened consumer confidence and spending, influenced by high prices of household necessities and policy uncertainties.

Free Cash Flow Reduction

Free cash flow for Q4 was $1.8 million, a significant decrease of $28.1 million compared to the prior year, impacted by lower volume and reduced inventory levels.

Net Loss Due to Impairment Charges

Net loss for Q4 was $37.8 million due to noncash goodwill and trademark impairment charges totaling $48.6 million.

Company Guidance

During the call, Holley provided guidance for the full year 2025, anticipating net sales of $580 million to $600 million, which implies a 2.5% growth at the midpoint from the company's core business base. The adjusted EBITDA for 2025 is projected to be between $113 million and $130 million. The company has factored in several key elements, including a $13 million reduction in revenue due to the divestiture of noncore businesses and a $14 million impact from discontinued products. Holley expects an organic growth rate of 0.8% to 4.3% on the core business. Other financial considerations include a $7 million expense increase related to the reinstatement of certain benefits and SOX-related investments, offset by $8 million to $10 million in operational savings, partially countered by $4 million to $5 million in inflation costs. The guidance reflects cautious optimism in light of current consumer confidence trends and assumes no further deterioration in the macroeconomic environment.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.