To The Moon

Stocks across the globe closed lower Friday after President Donald Trump unveiled his plan for levying tariffs on trading partners, threatening to upend decades of international cooperation.

The $Dow Jones(.DJI)$ tumbled 542 points, or 1.23%. The broader $S&P 500(.SPX)$ fell 1.6% and the tech-heavy $NASDAQ(.IXIC)$ slipped 2.24%.

The best-performing concepts is General Merchandise Stores. Considering the different perceptions of the stock, this time TigerPicks chose $Savers Value Village, Inc.(SVV)$ to have a fundamental highlight to help users understand it better.

$Savers Value Village, Inc.(SVV)$

Savers Value Village, Inc., together with its subsidiaries, sells second-hand merchandise in retail stores located in the United States (U.S.), Canada and Australia. Its segments include U.S. Retail and Canada Retail.

It provides low-priced merchandise ranging from clothing to home goods in a treasure-hunt shopping environment. It purchases secondhand textiles, shoes, accessories, housewares, books and other goods from its non-profit partners.

Shares remain on sale

Perhaps the best place to start when it comes to Savers Value Village would be the most recent results that we have. Those involved the first quarter of the 2025 fiscal year. During that time, revenue for the business totaled $370.1 million. That was up 4.5% compared to the $354.2 million reported the previous year.

This can really be chalked up to a couple of different factors. The big one was that the number of stores in operation grew from 326 to 353. While stores in Canada expanded from 159 locations to 166, the real growth here was on the US side of things. Year over year, the number of locations expanded from 155 to 172.

Comparable store sales also expanded. Systemwide, they grew by 2.8%. That compares to the 0.3% year over year improvement experienced the previous year. However, it is worth noting that the comparable store sales growth for the company was very uneven. In the U.S., it was an astounding 4.2%. But in Canada, it was only 0.6%.

In the U.S., the company benefited from higher average sales per basket and an increase in transactions. But in Canada, the company actually saw a decline in transactions. It was only because of a higher average basket that comparable store sales grew.

Even though the bottom line results for the company are worse year over year, it seems as though little to none of that will come from tariffs because of the company's business model. Instead, according to management, pressure on margins is coming from new stores that the business opened last year.

These were heavily focused on the second half of 2024 and, as the image above illustrates, profitability for new stores for their first-year operating tends to be in the red. In fact, it takes a little bit of time for sales and profits to increase. So the hope is that, as these stores mature, the picture will improve.

Conclusion

Based on the data currently available, I think that the market continues to underestimate Savers Value Village. Yes, profits and cash flows are contracting. But that seems to be related primarily to the rapid growth that the enterprise is exhibiting. Eventually, as these stores mature, the picture should improve.

And when you consider how cheap the stock currently is, it's difficult not to be bullish. Due to these factors and in spite of likely weakening moving forward, I do believe that maintaining it as a soft Buy candidate makes sense.

As much as I see the bull case, I find it surprising that the market has aggressively revalued SVV up to 22.5x forward PE (it was 16.5x in March). As I have noted above, the bull case narrative is that the top line can continue to grow, and ideally, with the Canada business, continue printing accelerating SSS growth, but the bear case narrative is just as important.

Despite these potential headwinds to margin, consensus is already pricing in adj. net income to grow from $36 million (last twelve months) to $89 million in FY26. I am not saying this is impossible, but I like to think it is safer to make such aggressive assumptions after a few more quarters of consistent execution. We also do not know how the tariff situation will really impact consumer spending. For all we know, the macro backdrop takes a nosedive (a recession), and consumers further cut spending.

Stock Price Forecast:

Here are the target price forecasts for the next 12 months from analysts.

Based on 7 Wall Street analysts offering 12 month price targets for Savers Value Village Inc. in the last 3 months. The average price target is $12.83 with a high forecast of $16.00 and a low forecast of $10.00. The average price target represents a 11.86% change from the last price of $11.47.

Resource:

https://seekingalpha.com/article/4805227-savers-value-village-remains-on-sale

https://seekingalpha.com/article/4782767-savers-value-village-remain-cautious-as-margins-could-take-a-big-hit-again

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