(NAPA), Willamette Valley Vineyards, Inc. (NASDAQ: WVVI) – Stock Wars: The Duckhorn Portfolio Vs. Willamette Valley Vineyards
Benzinga’s weekly Stock Wars brings together two leaders from a major industrial sector to determine which company is the best investment.
This week, the duel pits two wine companies: The Duckhorn Portfolio Inc. (NYSE: NAPA) and Willamette Valley Vineyards, Inc. (NASDAQ: WVVI).
The case of the Duckhorn wallet: Founded in 1976 by Dan and Margaret Duckhorn When they opened their Merlot-focused Duckhorn Wineries in California’s Napa Valley, this company included 10 wineries, eight winemaking facilities, seven tasting rooms, and over 800 acres of vineyards spanning 22 properties.
The company’s luxury wine brands include Duckhorn Vineyards, Decoy, Kosta Browne, Goldeneye, Paraduxx, Calera, Migration, Canvasback, Greenwing and Postmark, with wines retailing from $ 20 to $ 200 and are sold in the United States and 50 countries.
The private equity firm TSG Consumer Partners LLC acquired Duckhorn from another private equity firm, IG Partners, in 2016. The company held its initial public offering on March 17, 2021, with 20 million common shares to the public, 13.3 million shares being offered by Duckhorn and the remainder offered by its current shareholder to $ 15 per share.
According to a Bloomberg report, the shares rose 29% on the first day of trading and closed at $ 17.18, giving the company a market value of $ 1.98 billion.
In its latest earnings report, fiscal fourth quarter data released on October 4, the company reported net sales of $ 70.9 million, up from $ 52.2 million for the year. previous, and gross profit of $ 34.4 million, compared to $ 25.9 million. one year before.
Duckhorn’s net income was $ 7.4 million, or 6 cents per diluted share, compared to a net loss of $ 2.7 million, or -3 cents per diluted share, during the period of the year previous year, while its adjusted net income was $ 9.2 million, or 8 cents per share. diluted share, down from $ 7.4 million, or 7 cents per diluted share, a year earlier.
“Our brand equity, our diverse omnichannel platform and our very flexible supply chain position us very well to capitalize on the increased interest and demand for high quality wines, which have all contributed to a new period of robust sales and volume growth, ”said the President and CEO. Alex Ryan. “It is important to note that we continue to deliver profitable results in an environmentally responsible manner. “
Duckhorn opened on Wednesday at $ 21.49; since its IPO about seven months ago, its shares have traded between $ 16.16 and $ 25.25.
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The case of Willamette Valley Vineyards: Named after the region of Oregon, this company was founded in 1983 by Jim bernau and Don Voorhies and has become known over the years for its Pinot Noir, Pinot Gris and Chardonnay.
In September 1988, the company made history when Bernau received approval from the United States Securities and Exchange Commission to successfully complete the first self-subscribed Settlement A public offering. By the time this initiative came to an end in May 1989, Bernau had made the country’s first consumer-owned company “crowdfunded” with around 1,000 companies investing an average of $ 1,500 each.
In its latest earnings report, second quarter data released on August 12, the company reported revenue of $ 8.9 million, up from $ 5.5 million a year earlier, and profit gross of $ 5.1 million, up from $ 3.5 million the previous year. year.
Second quarter net income was just over $ 1 million with earnings per common share of 14 cents, compared to $ 620,421 in net income and 7 cents in earnings per common share the year before.
“Our wine sales directly to wine lovers and to our wholesalers’ accounts have never been higher in this first half of 2021,” said Bernau. “While labor shortages and supply chain disruptions have been difficult, we remain on track to open our new sparkling vineyard near Dundee and vineyard restaurants as planned. Construction of an additional 50,000 cases of fermentation capacity is on schedule and should be ready before what now appears to be one of Oregon’s first harvests.
Willamette Valley Vineyards opened Wednesday at $ 12.95, sandwiched between its 52-week range of $ 6 to $ 16.54.
The verdict: Relatively few companies in the wine industry are publicly traded, which is not surprising when you consider the particular challenges involved in wine production, ranging from the impact of weather on crops to grape to the required aging process before the finished products can be sold. It is not an item that can be made in a quick assembly line process.
The US wine industry has recorded 27 consecutive annual gains through 2020, but is expected to experience a 0.5% volume drop this year, to 335.4 million 9-liter cases, according to the 2021 edition of “The US Wine Market: Shanken’s Impact Databank Review & Forecast. “
“While the United States has been the largest consumer wine market in the world since 2013, volume growth has been modest at best in each of the past 10 years due to fierce competition from whiskeys, Seltzer and other ready-to-drink brands. Says the Shanken report. “While the wine industry saw an above-average 2% volume increase last year due to off-premises gains during the pandemic, wine continues to lose market share in favor of spirits and spirits. flavored malt beverages. “
If The Duckhorn Portfolio and Willamette Valley Vineyards seem rather modest in terms of sales, consider that the only American brand with over $ 1 billion in retail sales is Barefoot Cellars from Grape Links Inc.
By choosing which of these two titles is stronger, Willamette Valley Vineyards has a clear proven track record and their Oregon wines maintain themselves in a very competitive market – only 1% of American wine comes from Oregon.
But, The Duckhorn Portfolio has rolled out of the IPO tunnel like a freight train and is trading higher than its established rival. Even with seven months of trading,
The Duckhorn portfolio is always on the ground floor for investors looking for long-term growth. For this reason, we raise our Stock Wars glass to cheers at the Duckhorn portfolio as the best investment in this stock duel.
Photo: Arek Socha from Pixabay.
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