Core Viewpoint - Holley Inc. (NYSE: HLLY) is facing a federal securities fraud class action lawsuit, with allegations that the company misled investors regarding its financial health and relationships with resellers and distributors [2][3]. Group 1: Allegations of Misleading Statements - The lawsuit claims that Holley Inc. made false or misleading statements about its direct-to-consumer (DTC) channel, which negatively impacted its relationships with resellers and distributors, crucial for the majority of its revenue [2]. - It is alleged that Holley's focus on the DTC channel led to significant damage to its relationships with resellers and distributors, resulting in decreased purchases and increased returns of products [2]. - The company reportedly used discounting strategies to grow its DTC channel, undermining its historical pricing discipline with resellers and distributors [2]. - The lawsuit asserts that Holley's DTC growth could not compensate for the negative financial impacts stemming from strained relationships with resellers and distributors [2]. - Holley is accused of failing to integrate and capture synergies from its acquisitions, leading to operational inefficiencies and inventory management issues [2]. - The complaint highlights that Holley benefited from temporary COVID-related stimulus funds, misleading investors into believing that the resulting growth was sustainable [2]. Group 2: Legal Proceedings - The court has determined that the complaint has sufficiently pleaded allegations of falsity and scienter, meeting the necessary legal standards to survive a motion to dismiss [3]. - The court found that the complaint adequately listed misleading statements made by company leadership and provided reasons for their falsity [3]. Group 3: Shareholder Actions - Current shareholders of Holley who have held shares since on or shortly after July 21, 2021, can seek corporate reforms and the return of funds to the company at no cost [4].

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Core Viewpoint - Holley Inc. (NYSE: HLLY) is facing a federal securities fraud class action lawsuit, with allegations that the company misled investors regarding its financial health and relationships with resellers and distributors [2][3]. Group 1: Allegations of Misleading Statements - The lawsuit claims that Holley Inc. made false or misleading statements about its direct-to-consumer (DTC) channel, which negatively impacted its relationships with resellers and distributors, crucial for the majority of its revenue [2]. - It is alleged that Holley's discounting strategies to promote the DTC channel undermined pricing discipline, further damaging relationships with resellers and distributors [2]. - The complaint states that due to strained relationships, resellers and distributors reduced their purchases of Holley products and returned products at levels significantly above historical norms [2]. Group 2: Financial Impact and Operational Issues - Holley's DTC channel growth was insufficient to offset the negative financial impacts stemming from deteriorating relationships with resellers and distributors [2]. - The company reportedly failed to integrate and capture synergies from its acquisitions, leading to inefficient operations, excess costs, and inventory management problems [2]. - Holley is accused of misleading investors about the sustainability of its sales growth, which was temporarily boosted by COVID-related stimulus funds [2]. Group 3: Legal Proceedings - The court has determined that the complaint has sufficiently pleaded allegations of falsity and scienter, meeting the necessary criteria to survive a motion to dismiss [3]. - Current shareholders of Holley who held shares since on or shortly after July 21, 2021, can seek corporate reforms and a court-approved incentive award at no cost [4].

Core Insights - Holley Performance Brands is showcasing its latest product offerings at the PRI Show in Indianapolis from December 11-13, 2025, emphasizing its commitment to motorsports heritage and strategic growth for 2026 [1][4][5] Company Strategy - The company has focused on intentional and thoughtful actions throughout 2025 to elevate its Safety & Racing brands, aligning teams and modernizing brand positioning to foster product innovation and category leadership [2][5] - Investments made in 2025 are expected to translate into meaningful advancements in product offerings and customer engagement [2] Product Innovations - Holley will introduce a new line of helmets compliant with the Snell SA2025 safety standards, alongside new models from its brands, including RaceQuip's NX25 and Simpson's Bandit and Kingsnake [6][5] - The showcase will also feature a special heritage display, including a fire suit worn by brand founder Bill Simpson during a notable demonstration in 1986, highlighting the brand's historical significance [11] Event Significance - The PRI Show serves as a critical platform for Holley to present its advancements in the Safety & Racing portfolio, celebrating the legacy of its iconic brands while unveiling new products [7][5] - Experts and brand teams will be available at the event to connect with attendees and provide insights into recent product launches and future innovations [8]

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Core Viewpoint - Momentum investing focuses on "buying high and selling higher," contrasting with traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Characteristics - Momentum investing can be risky as stocks may lose momentum if future growth does not justify high valuations [2] - A safer approach involves investing in bargain stocks that exhibit recent price momentum, identified through tools like the Zacks Momentum Style Score [3] Group 2: Holley Inc. (HLLY) Analysis - Holley Inc. (HLLY) has shown a price increase of 23.4% over the past four weeks, indicating strong investor interest [4] - HLLY has gained 1.4% over the past 12 weeks and has a beta of 1.36, suggesting it moves 36% more than the market [5] - HLLY has a Momentum Score of B, indicating a favorable time to invest based on momentum [6] Group 3: Earnings Estimates and Valuation - HLLY has a Zacks Rank 2 (Buy) due to upward revisions in earnings estimates, which attract more investors [7] - The stock is trading at a Price-to-Sales ratio of 0.72, indicating it is reasonably valued at 72 cents for each dollar of sales [7] Group 4: Additional Investment Opportunities - Besides HLLY, there are other stocks that meet the criteria of "Fast-Paced Momentum at a Bargain" [8] - Investors can explore over 45 Zacks Premium Screens tailored to identify winning stock picks based on various investing styles [9]

Group 1: Holley Inc. (NYSE:HLLY) - Holley Inc. is trading at $3.62 with a target price of $2.20, indicating a potential downside of 39.35% [1][5] - The stock is excluded from coverage due to a pessimistic outlook from investment analysts [1] Group 2: Strattec Security Corporation (STRT) - Strattec Security Corporation is trading at $67.11 with a target price of $81.90, suggesting a growth potential of 22.03% [2][4][5] - The company has a market cap of $280.87 million and a price-to-earnings (P/E) ratio of 13.42, indicating financial stability [2] Group 3: MasterCraft Boat Holdings, Inc. (MCFT) - MasterCraft Boat Holdings is currently priced at $20.13 with a target price of $14.42, facing a potential downside of 28.39% [3][5] - The company has a market cap of $328.85 million, but its P/E ratio of 43.41 suggests it may be overvalued [3] - The earnings per share (EPS) of $0.81 indicates limited profitability compared to peers [3]

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Core Insights - Holley Inc. reported quarterly earnings of $0.03 per share, missing the Zacks Consensus Estimate of $0.04 per share, compared to a loss of $0.01 per share a year ago, resulting in an earnings surprise of -25.00% [1] - The company posted revenues of $138.37 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 5.02%, and showing an increase from year-ago revenues of $134.04 million [2] - Holley shares have declined approximately 9.6% year-to-date, contrasting with the S&P 500's gain of 14.3% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.08 on revenues of $139.34 million, and for the current fiscal year, it is $0.23 on revenues of $590.8 million [7] - The estimate revisions trend for Holley was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Automotive - Original Equipment industry, to which Holley belongs, is currently in the top 37% of over 250 Zacks industries, suggesting that stocks in the top 50% outperform those in the bottom 50% by more than 2 to 1 [8] - Faraday Future Intelligent Electric Inc., another company in the same industry, is expected to report a quarterly loss of $0.36 per share, reflecting a year-over-year change of +87.4%, with revenues expected to be $0.25 million, up 2400% from the year-ago quarter [9][10]

Financial Data and Key Metrics Changes - The company achieved net sales of $138.4 million for Q3 2025, reflecting a 3.2% increase compared to $134 million in the same period last year [21] - Core business growth was reported at 6.4%, marking the third consecutive quarter of year-over-year growth [22] - Gross margin improved to 43.2%, an increase of 422 basis points from 39% in the prior year [22] - Adjusted EBITDA for the quarter was $27.1 million, up from $22.1 million in the previous year, with an adjusted EBITDA margin of 19.6%, a 309 basis point improvement [23][24] - Free cash flow generation was $5.5 million, a significant improvement from a negative $2.1 million in the same quarter last year [24] Business Line Data and Key Metrics Changes - The B2B channel experienced a growth of 7.3%, driven by enhanced engagement with key partners [6] - Direct-to-consumer sales increased by 4.2% year-over-year, supported by improved promotional execution and digital performance [11] - The domestic muscle division grew by 6.2%, while the Euro and import division saw a remarkable growth of 16.6% [12][13] Market Data and Key Metrics Changes - The company reported strong engagement from its enthusiast community, with attendance at events remaining robust despite weather-related challenges [11] - E-commerce and direct-to-consumer channels performed well, with third-party marketplaces growing by 28% year-to-date [15] Company Strategy and Development Direction - The company is focused on an omnichannel strategy, enhancing customer engagement across various platforms [4] - Strategic initiatives contributed approximately $27.8 million in revenue and $6.2 million in cost savings during the quarter, reflecting disciplined execution and operational improvements [17] - The company aims to maintain gross margins above 40% and achieve adjusted EBITDA margins of 20% [56] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the fluid economic environment, citing factors such as higher unemployment and persistent inflation affecting consumer sentiment [26] - Despite these challenges, the company raised its full-year revenue guidance to a range of $590 to $605 million, reflecting confidence in its operational execution [27] - The company remains committed to strengthening its balance sheet and enhancing free cash flow generation [27] Other Important Information - The company prepaid an additional $10 million in debt, bringing total prepayments to $100 million since September 2023, marking a significant milestone in its transformation [25] - The company is focused on operational improvements and enhancing working capital management, with inventory reduction efforts ongoing [20] Q&A Session Summary Question: Pricing realization and delta explanation - Management indicated that the delta in pricing realization is due to a combination of strong B2B growth and contractual pricing not flowing through immediately [28][29] Question: Structural margin profile and sustainability - Management confirmed no structural changes affecting margins and indicated a commitment to driving continued margin acceleration [30] Question: Organic sales growth expectations for Q4 - Management noted that conservatism in guidance is due to current market conditions and the absence of a marketing calendar event from the previous year [32] Question: Impact of consumer spending changes - Management expressed confidence in consumer resilience and potential increases in demand due to discretionary income or tax refunds [34] Question: Priorities for 2026 - Management highlighted ongoing focus on strategic initiatives and operational improvements as key priorities for the upcoming year [35] Question: Inventory levels and operational decisions - Management explained that increased inventory levels were a strategic decision to enhance customer service and operational visibility [36] Question: Competitive landscape and share gains - Management stated that share gains are attributed to enhanced relationships with distributors and improved product data quality [53]