Regis (RGS) AI Stock Analysis

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Regis

(NASDAQ:RGS)

56Neutral

Regis's financial performance is mixed, with strong profitability but declining revenues and high leverage. Technical indicators are bearish, though the valuation suggests potential undervaluation. Strategic initiatives from the earnings call provide optimism, yet challenges remain, leading to a moderate overall score.

Regis (RGS) vs. S&P 500 (SPY)

Market Cap

$41.31M

Dividend YieldN/A

Average Volume (3M)18.42K

Price to Earnings (P/E)0.4

Beta (1Y)0.99

Revenue Growth-11.38%

EPS GrowthN/A

CountryUS

Employees1,945

SectorConsumer Cyclical

Sector Strength60

IndustryPersonal Products & Services

Share Statistics

EPS (TTM)36.44

Shares Outstanding2,435,979

10 Day Avg. Volume14,594

30 Day Avg. Volume18,417

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.23

Price to Cash Flow (P/CF)5.10

P/FCF Ratio1.70

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Regis Business Overview & Revenue Model

Company DescriptionRegis Corporation (RGS) is a leader in the beauty salon industry, primarily operating and franchising hair care salons across North America. The company owns and operates well-known salon brands, including Supercuts, Cost Cutters, and SmartStyle, which are typically located in shopping malls and high traffic areas. Regis offers a wide range of hair care services and products, catering to diverse customer needs with a focus on convenience and affordability.

How the Company Makes MoneyRegis Corporation primarily generates revenue through the operation and franchising of hair salons. The company's income is derived from two main sources: the direct operation of company-owned salons and the collection of franchise fees and royalties from independently owned franchises. Revenue from company-owned salons comes from the provision of haircuts, coloring, styling services, and the sale of hair care products. Franchise revenue involves initial franchise fees paid by franchisees to use Regis' brands, as well as ongoing royalties based on a percentage of the franchisees' sales. Regis also benefits from strategic partnerships with product manufacturers and distributors, enhancing its product offerings and contributing to its revenue streams.

Regis Financial Statement Overview

Summary

Regis shows commendable profitability improvements with strong net and EBIT margins, and positive free cash flow. However, declining revenues and high leverage with a debt-to-equity ratio of 4.16 present significant challenges.

Income Statement

Positive

Regis has demonstrated significant improvements in profitability over recent periods, with a strong TTM net profit margin of 50.0% and a positive EBIT margin of 8.5% in TTM, indicating effective cost management and operational efficiency. However, the company has experienced a declining revenue trend from $415.1M in 2021 to $191.3M in TTM, which poses a challenge for sustaining long-term growth.

Balance Sheet

Negative

The balance sheet reflects high leverage with a debt-to-equity ratio of 4.16 in TTM, showing significant reliance on debt financing. Stockholders' equity remains low at $66.7M as of TTM, although improved from prior negative equity positions. The equity ratio of 12.6% in TTM indicates limited asset backing, which could be a risk if financial conditions worsen.

Cash Flow

Neutral

Regis has improved its cash flow position, turning to positive free cash flow of $5.1M in TTM from previous negative figures. The operating cash flow to net income ratio of 0.06 in TTM suggests that while positive, operating cash flows are not yet robust. Free cash flow growth is significant, but sustainability remains a concern given past volatility.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
191.34M	202.98M	233.33M	275.97M	415.11M	669.73M
	Gross Profit
108.20M	101.76M	76.54M	65.62M	129.41M	235.55M
	EBIT
16.31M	20.89M	8.78M	-15.24M	-91.13M	-80.28M
	EBITDA
74.80M	68.74M	17.30M	-22.67M	-81.44M	-108.39M
	Net Income Common Stockholders
95.66M	91.06M	-7.38M	-46.46M	-113.33M	-172.19M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
168.91M	10.07M	9.51M	17.04M	19.19M	113.67M
	Total Assets
1.95B	530.50M	607.38M	769.30M	996.38M	1.34B
	Total Debt
469.88M	399.28M	550.65M	691.63M	822.25M	1.02B
	Net Debt
300.97M	389.21M	541.14M	674.59M	803.06M	909.54M
	Total Liabilities
941.71M	473.71M	644.11M	800.25M	979.34M	1.22B
	Stockholders Equity
1.01B	56.79M	-36.73M	-30.95M	17.05M	125.70M
Cash Flow		Free Cash Flow
5.10M	-2.42M	-8.37M	-43.95M	-111.36M	-123.90M
	Operating Cash Flow
5.60M	-2.04M	-7.89M	-38.64M	-99.88M	-86.41M
	Investing Cash Flow
-8.66M	1.62M	4.02M	7.68M	-2.10M	61.03M
	Financing Cash Flow
13.72M	8.36M	-2.15M	29.42M	7.78M	56.16M

Regis Technical Analysis

Technical Analysis Sentiment

Negative

Last Price15.51

Price Trends

50DMA

20.61

Negative

100DMA

21.84

Negative

200DMA

22.67

Negative

Market Momentum

MACD

-0.86

Negative

RSI

40.21

Neutral

STOCH

43.51

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RGS, the sentiment is Negative. The current price of 15.51 is below the 20-day moving average (MA) of 17.96, below the 50-day MA of 20.61, and below the 200-day MA of 22.67, indicating a bearish trend. The MACD of -0.86 indicates Negative momentum. The RSI at 40.21 is Neutral, neither overbought nor oversold. The STOCH value of 43.51 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RGS.

Regis Risk Analysis

Regis disclosed 31 risk factors in its most recent earnings report. Regis reported the most risks in the “Ability to Sell” category.

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

Latest Risks Added 0 New Risks

Regis Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ULTA	77 Outperform	$15.54B	12.93	50.39%	―	0.79%	-2.70%
SBH	70 Neutral	$864.57M	4.77	29.39%	―	0.57%	6.28%
EPC	63 Neutral	$1.35B	15.31	6.02%	2.14%	-1.24%	-10.95%
Sector *	59 Neutral	$10.97B	9.83	-1.56%	4.06%	1.31%	-16.49%
RGS	56 Neutral	$41.31M	0.43	526.88%	―	-11.38%	―
BBWI	56 Neutral	$5.81B	7.51	-52.83%	2.95%	-1.63%	-5.94%
LCUT	54 Neutral	$99.95M	―	-6.58%	3.77%	-0.54%	-78.88%

* Consumer Cyclical Sector Average

Performance Comparison

RGS

Regis

15.51

8.72

128.42%

LCUT

Lifetime Brands

4.13

-5.80

-58.41%

BBWI

Bath & Body Works

25.51

-18.89

-42.55%

SBH

Sally Beauty

7.95

-2.97

-27.20%

ULTA

Ulta Beauty

328.01

-122.94

-27.26%

EPC

Edgewell Personal Care

27.44

-7.77

-22.07%

Regis Earnings Call Summary

Earnings Call Date: Feb 12, 2025 | % Change Since: -42.11% | Next Earnings Date: Apr 30, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted significant strategic initiatives, such as the acquisition of Alline Salon Group and the successful launch of the Supercuts loyalty program, leading to improved financial metrics. However, challenges like same-store sales decline and brand-specific performance issues balanced the narrative, indicating a cautiously optimistic outlook.

Highlights

Acquisition of Alline Salon Group

Regis acquired the Alline Salon Group, adding 314 salons to the company, enhancing strategic and financial positioning, and expected to drive future growth.

Improved Financial Performance

Year-over-year improvements in operating income, net income, earnings per share, adjusted EBITDA, and cash flow. Adjusted EBITDA increased by 12.7% to $7.1 million, and earnings per share rose to $2.71.

Successful Launch of Supercuts Loyalty Program

Supercuts Rewards program launched with 27% of sales via members and improved same-store sales and traffic by 200 basis points for salons with high membership adoption.

Positive Cash Flow Generation

Regis returned to generating positive cash from operations, reflecting a $7.6 million improvement over the prior year for the six-month period.

Lowlights

Same-Store Sales Decline

Same-store sales declined by 1.6% in the second quarter, affected by a smaller window between Thanksgiving and Christmas and brand-specific disparities.

SmartStyle Brand Performance

SmartStyle brand underperformed with a 6.4% decline in sales, attributed to closures and remodels within Walmart.

Revenue Decline

Total second quarter revenues were $46.7 million, an 8.5% decline compared to the prior year, driven by franchise closures and a challenging sales environment.

Impact of Store Closures

Store closures had a 130 basis points drag on overall comps for the second quarter, affecting same-store sales performance.

Company Guidance

During the second quarter of fiscal year 2025, Regis made notable strides in both strategic acquisitions and financial performance. The acquisition of the Alline Salon Group, consisting of 314 salons, significantly bolstered Regis's portfolio, enhancing their strategic position and contributing $2.7 million in revenue and $0.5 million in EBITDA within just two weeks post-acquisition. This acquisition was valued at $22 million, with $19 million paid in cash and approximately 140,000 shares of stock. Financially, Regis reported a 12.7% year-over-year increase in adjusted EBITDA, totaling $7.1 million, despite an 8.5% decline in total revenue to $46.7 million. The decline was primarily attributed to a decrease in no-margin franchise rental income and same-store sales, which fell by 1.6%. However, the company's same-store sales showed disparity among brands, with Supercuts experiencing a slight growth of 0.5%, whereas SmartStyle saw a decline of 6.4%. Earnings per diluted share were $2.71, although adjusted earnings per share were $0.61 due to one-time income from discontinued operations. The strategic focus remains on optimizing brand strategy and salon operations, with initiatives like the Supercuts loyalty program showing promising results, achieving 27% of sales through membership and boosting same-store sales and traffic by 200 basis points in high-participation salons. Looking forward, Regis is committed to driving growth through a mix of corporate and franchise salons, with key strategic initiatives aimed at improving salon-level performance and digital guest experiences.

Regis Corporate Events

M&A TransactionsBusiness Operations and Strategy

Regis Corporation Expands with Strategic Acquisition of Alline

Positive

Dec 19, 2024

Regis Corporation has acquired Alline Salon Group, its largest franchisee, for $22 million in cash and stock, with potential additional earn-out payments. The acquisition strengthens Regis’ operational footprint and provides a testing ground for brand initiatives, maintaining an asset-light model with most salons still franchisee-owned. This strategic move is expected to enhance Regis’ EBITDA and provide value creation opportunities, aligning stakeholder interests towards success.

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.