SharkNinja (SN) stock has shot up nearly 137% since the company’s IPO in July 2023 and is still not getting the attention it deserves, as it’s an under-the-radar stock. The innovative consumer products designer makes world-class appliances and offers them at prices that don’t break the buyer’s bank.
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The Shark brand is known for products like self-emptying vacuums and all-in-one hair stylers, while the Ninja brand is famous for ice cream makers, blenders, and air fryers. The company currently offers products in 33 different subcategories, and management is committed to launching at least one new category under each brand every year for years to come.
I am bullish on SharkNinja because of its commitment to innovation, its consumer-focused strategy, and the untapped potential it has, given how successful its three-pillar growth strategy has been for 15 years.
Commitment to Innovation and a Successful Growth Strategy
When I say SharkNinja is an “innovative” company, I mean it quite literally. Over the past three years, the company has expanded into 18 new product categories under both its brands, including hair dryers, carpet extractors, outdoor grills, and waffle makers. SharkNinja launched 25 products in 2023, of which 20 were upgrades in existing categories. In Q1 2024, the firm entered two billion-dollar product categories: indoor/outdoor fans and portable coolers.
SharkNinja has over 4,500 patents in force globally and a team of more than 800 product engineers and designers across the U.S., UK, and China. However, what’s most interesting is the company’s three-pillar growth strategy: grow share in existing categories, expand into new categories, and increase global footprint.
This strategy has helped the company grow its sales from just $250 million in 2008 to about $4.3 billion in 2023 at a compound annual growth rate (CAGR) of 20%. That’s not bad for a consumer appliances company.
SharkNinja has more than 20% market share in most of its categories in the U.S. and the UK (its two primary markets), and it has only grown its share, not lost it, between 2020 and 2023. In Q1, revenue amounted to $1.1 billion and was ahead of analysts’ estimates by $116 million. Management raised its Fiscal 2024 revenue guidance and now expects sales to grow by 12% to 14% year-over-year, up from the prior guidance of 10% to 12%.
Now, let’s talk about the third pillar: international expansion. In 2023, SharkNinja entered six countries with new products and forged new partnerships with retailers in Europe and Latin America. Chief Executive Officer Mark Barrocas believes these moves have positioned the company favorably to drive growth via international expansion in 2024 and beyond.
SharkNinja’s products are sold in 32 markets worldwide, and its international sales were $1.2 billion last year. Barrocas believes SharkNinja’s international business will outperform the company’s U.S. business in the long term as its products become popular among consumers worldwide.
Over the next few years, SharkNinja will be laser-focused on realizing opportunities in Europe, particularly in Italy, Spain, the Nordics, and the Middle East. Currently, the UK is SharkNinja’s largest international market, and it accounted for $840 million of its net sales in 2023.
A Consumer-Centric Strategy Allows It to Stay Ahead of the Curve
SharkNinja goes above and beyond to make its appliances rich with features so consumers don’t get bored or irritated while vacuuming or making smoothies. The company invests heavily in research & development, and in 2023, it poured $249.4 million into R&D (about 6% of sales). Management is still focused on product innovation and will continue to invest in research.
SharkNinja is on a mission to improve lifestyles. The company visits homes and logs feedback to solve and even identify pain points. This strategy of continuous innovation and improvement is what’s making its products, such as the Ninja CREAMi, go viral on social media.
It’s difficult to compete with a company that goes on-site to where its products are being used and endlessly studies customer reviews just to get feedback and find areas for improvement. SharkNinja’s “24/7 innovation cycle,” which management is big on, allows it to stay ahead of the curve and offer valuable products at inexpensive prices. That’s a wide moat and a set-up for margin expansion, if you ask me.
SharkNinja Has Immense Untapped Potential
According to CEO Mark Barrocas, SharkNinja is “just getting started,” and I agree. Management pointed out that the total addressable market for SharkNinja’s products is about $120 billion, as of Q1 2024, and it’s growing. With $4.5 billion in trailing 12-month sales, the company has not even captured 4% of its addressable market.
SharkNinja’s revenue has grown at a CAGR of 20% over the last 15 years. I like being conservative with my “guesstimates,” so let’s say it grows at 10% over the next 15 years, and the total addressable market doesn’t change. Assuming this, SharkNinja will reach $18 billion by the 15th year. That’s just 15% of its current total addressable market.
By the way, did I mention that the company has not ever bought $1 of growth? Both Shark and Ninja have organically grown into brands with sales of over $2 billion.
Therefore, I believe there’s a lot of untapped potential that SharkNinja can capitalize on as the company continues to gain share in existing categories, expand into new categories, and enter new geographies.
Is SharkNinja Stock a Buy, According to Analysts?
On the Street, SN has a consensus Strong Buy rating based on six Buy ratings assigned by analysts in the past three months. The average SharkNinja stock price target of $84.75 represents upside potential of 18% from current levels.
The Bottom Line on SharkNinja
SharkNinja is trading at 18.5 times its forward earnings, a 20% premium to its sector. Analysts expect earnings to grow to $3.86 per share this year, and if the company beats analysts’ estimates, as it has over the past three quarters, its earnings will grow by 20% year-over-year or more.
The takeaway here is simple: SN may be trading at a premium to its sector, but it’s also offering investors some decent growth in exchange. SharkNinja can potentially deliver higher returns as the company continues to execute its growth strategy and expand its market share. There’s a lot of opportunity that awaits the company, and it’s “just getting started.”
