Back to Bio

At Home Group Inc.: Initiation of Research Coverage

Monday, August 29, 2016

William Blair & Company initiated research coverage of At Home Group Inc. (HOME $16.08), a leading home décor superstore.

Analyst Daniel Hofkin estimated the company would generate adjusted earnings per share of $0.54 and revenue of $740 million in fiscal 2016 (the fiscal year ends January 2017), followed by adjusted EPS of $0.76 and revenue of $876 million in fiscal 2017.

“We believe that At Home is unlike any other home décor retailer,” Hofkin said. “Its large store format, which averages 120,000 square feet, enables it to carry a home décor product assortment with a breadth and depth unmatched in the market today. A typical At Home store has 10 times more space dedicated to home décor than its competitors and offers 15 times the assortment. The large store size also enables At Home to sell larger products and fully assembled products that competitors with smaller stores are unable to sell. At Home offers everyday low prices that can be up to 60% below competitors for similar items, in part because of its unbranded/private-label offering, which accounts for 70% of sales, and its value-engineering process.”

Hofkin added, “At Home’s focus on running highly efficient stores enables the company to generate industry-leading store-level EBITDA margins, despite its relatively low sales productivity. The company’s flexible real estate strategy enables opportunistic site selection, whether leasing, purchasing a second-generation property, or building a store from the ground up. This approach to real estate results in rents at a level we believe to be among the lowest in all of retail. In addition, the company’s store model is designed to promote a largely self-service shopping experience, which minimizes in-store staffing requirements. The combination of these efforts drives a significantly below-average cost structure.”

William Blair is a global investment banking and asset management firm. We are committed to building enduring relationships with our clients and providing expertise and solutions to meet their evolving needs. An independent and employee-owned firm, William Blair is based in Chicago, with offices in 18 cities across four continents.

View our research coverage list


William Blair or an affiliate does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as a single factor in making an investment decision.

William Blair or an affiliate was a manager or co-manager of a public offering of equity securities of At Home Group Inc. within the prior 12 months.

William Blair or an affiliate is a market maker in the security of At Home Group Inc.

William Blair or an affiliate expects to receive or intends to seek compensation for investment banking services from At Home Group Inc. within the next three months.

William Blair or an affiliate received compensation for investment banking services from At Home Group Inc. within the last 12 months. At Home Group Inc. is or was, within the last 12 months, an investment banking client of William Blair and/or one or more of its affiliates.

Additional information is available upon request.

Please contact us at +1 800 621 0687 or view disclosures on our coverage list.

Current Ratings Distribution (as of 7/31/16)

Coverage Universe
Outperform (Buy): 63%
Market Perform (Hold): 36%
Underperform (Sell): 1% 

Inv. Banking Relationships*
Outperform (Buy): 8%
Market Perform (Hold): 3%
Underperform (Sell): 0%

* Percentage of companies in each rating category that are investment banking clients, defined as companies for which William Blair has received compensation for investment banking services within the past 12 months.

The compensation of the research analyst is based on a variety of factors, including performance of his or her stock recommendations; contributions to all of the firm’s departments, including asset management, corporate finance, institutional sales, and retail brokerage; firm profitability; and competitive factors.

Stock ratings, price targets, and valuation methodologies: William Blair & Company, L.L.C. uses a three-point system to rate stocks. Individual ratings and price targets (where used) reflect the expected performance of the stock relative to the broader market (generally the S&P 500, unless otherwise indicated) over the next 12 months. The assessment of expected performance is a function of near-, intermediate-, and long-term company fundamentals, industry outlook, confidence in earnings estimates, valuation (and our valuation methodology), and other factors. Outperform (O) – stock expected to outperform the broader market over the next 12 months; Market Perform (M) – stock expected to perform approximately in line with the broader market over the next 12 months; Underperform (U) – stock expected to underperform the broader market over the next 12 months; not rated (NR) – the stock is not currently rated. The valuation methodologies used to determine price targets (where used) include (but are not limited to) price-to-earnings multiple (P/E), relative P/E (compared with the relevant market), P/E-to-growth-rate (PEG) ratio, market capitalization/revenue multiple, enterprise value/EBITDA ratio, discounted cash flow, and others.

Company Profile: The William Blair research philosophy is focused on quality growth companies. Growth companies by their nature tend to be more volatile than the overall stock market. Company profile is a fundamental assessment, over a longer-term horizon, of the business risk of the company relative to the broader William Blair universe. Factors assessed include: 1) durability and strength of franchise (management strength and track record, market leadership, distinctive capabilities); 2) financial profile (earnings growth rate/consistency, cash flow generation, return on investment, balance sheet, accounting); 3) other factors such as sector or industry conditions, economic environment, confidence in long-term growth prospects, etc. Established Growth (E) – Fundamental risk is lower relative to the broader William Blair universe; Core Growth (C) – Fundamental risk is approximately in line with the broader William Blair universe; Aggressive Growth (A) – Fundamental risk is higher relative to the broader William Blair universe.

The ratings, price targets (where used), valuation methodologies, and company profile assessments reflect the opinion of the individual analyst and are subject to change at any time.

Our salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies—to our clients and our trading desks—that are contrary to opinions expressed in this research. Certain outstanding reports may contain discussions or investment opinions relating to securities, financial instruments and/or issuers that are no longer current. Always refer to the most recent report on a company or issuer before making an investment decision. Our asset management and trading desks may make investment decisions that are inconsistent with recommendations or views expressed in this report. We will from time to time have long or short positions in, act as principal in, and buy or sell the securities referred to in this report. Our research is disseminated primarily electronically, and in some instances in printed form. Electronic research is simultaneously available to all clients. This research is for our clients only. No part of this material may be copied or duplicated in any form by any means or redistributed without the prior written consent of William Blair & Company, L.L.C.

This is not in any sense a solicitation or offer of the purchase or sale of securities. The factual statements herein have been take from sources we believe to be reliable, but such statements are made without any representation as to accuracy or completeness or otherwise. Opinions expressed are our own unless otherwise stated. Prices shown are approximate.

This material is distributed in the United Kingdom and the European Economic Area (EEA) by William Blair International, Ltd., authorized and regulated by the Financial Conduct Authority (FCA), and is only directed at and is only made available to persons falling within articles 19, 38, 47, and 49 of the Financial Services and Markets Act of 2000 (Financial Promotion) Order 2005 (all such persons being referred to as “relevant persons”). This document is intended for persons regarded as professional investors (or equivalent) and is not to be distributed to or passed onto any “retail clients.” No persons other than persons to whom this document is directed should rely on it or its contents or use it as the basis to make an investment decision.

“William Blair” and “R*Docs” are registered trademarks of William Blair & Company, L.L.C. Copyright 2016, William Blair & Company, L.L.C. All rights reserved.