FOXF – Market expectations are for Uniform ROA to expand, but management may have concerns about supply chain constraints, acquisitions, and demand

• Fox Factory Holding Corp. (FOXF:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 30.6x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about supply chain constraints, the Outside Van and SOLA Sports acquisitions, and the sustainability of demand.
• Specifically, management may have concerns about persisting supply chain constraints and inflationary challenges, rising labor and commission costs, and the impact of the Delta variant on their business. In addition, they may be overstating the strategic importance and synergies of the Outside Van and SOLA Sports acquisitions, as well as the potential of the e-bike category. Furthermore, management may be concerned about the accuracy of their component supply and bike demand forecasts and they may lack confidence in their ability to realize pent-up bike demand and sustain adjusted EPS growth.