Bear of the Day: Haverty's (HVT) - Bear of the Day
07 May 2014 - 8:26PM
Zacks
Haverty Furniture Companies, Inc. (HVT) got hit by the
severe winter weather in the first quarter. This furniture maker is
seeing sales momentum pick up however.
Havertys has seen it all. The company was founded
in 1885 in Atlanta and used to make deliveries in horse and buggy.
It now has showrooms in 16 Southern and Midwest states. Havertys
went public in 1929 during dark economic times, but it has survived
each of the big economic shocks.
The impact of the recent housing bust is obvious in
Havertys multi-year earnings history. Earnings plunged 88.7% in
2007 to just 8 cents before the rest of the country went into
recession and took Havertys even lower.
The company didn't make money in either 2008 or
2009. Even 2010 and 2011 were still a struggle. But in 2012, the
turnaround in the housing market, and the consumer, began to take
hold. Havertys made 67 cents that year and it has seen rising
earnings ever since.
Weather Hits the First Quarter
On May 1, Haverty's reported first quarter results
and beat the Zacks Consensus by 2 cents. Earnings were $0.27
compared to the Consensus of $0.25.
But that was 9 cents under the first quarter of
2013.
First quarter comparable store sales also were 0.9%
lower than the first quarter the year before. Weather was the
culprit as comparable store sales actually increased 7.3% in its 30
store in the south which were not impacted by the severe winter
weather.
April, however, saw the return of sales momentum.
Comparable store business as of May 1 was trending up 7.5% in the
second quarter after adjusting for the Easter calendar shift. Total
written business was also up 6.4% on top of the 19% produced the
year before.
Full Year Estimates Cut
The Zacks Rank is a short term recommendation of
just 1 to 3 months which analyzes analyst estimates. The analysts
have been cutting full year estimates due to the weak first quarter
which was weather related.
The 2014 Zacks Consensus has fallen to $1.36 from
$1.55 over the last 90 days. It is now expected to see an earnings
contraction of 3.9% in 2014.
The Zacks Rank isn't making a judgment on the
longer term outlook for Haverty's business, just the shorter term
outlook in the estimates.
Shares Have Weakened
Shares have pulled back over the last month.
Haverty's has a forward P/E of 19.5 which isn't
exactly cheap, even with the recent pullback.
If you really want to buy a furniture retailer
right now, you may want to consider Restoration Hardware
Holdings Inc. (RH). It is a Zacks Rank #2 (Buy) and is expected
to grow earnings by the triple digits this year.
[In full disclosure, the author of this article
owns shares of RH.]
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Tracey Ryniec is the Value Stock Strategist for Zacks.com.
She is also the Editor of the Insider Trader and Value Investor
services. You can follow her on twitter at @TraceyRyniec.
HAVERTY FURNIT (HVT): Free Stock Analysis Report
RESTORATION HDW (RH): Free Stock Analysis Report
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