On Wednesday, Sidoti adjusted its outlook for Haverty (NYSE:HVT) Furniture Companies Inc. (NYSE: HVT), citing challenges faced by the home furnishings industry. The firm noted that Haverty is contending with lower post-pandemic demand, with decreased in-store traffic being the primary challenge.
Still, improved in-store conversion rates have helped offset some of the downturn, as customers entering the stores are more prepared to make purchases.
Despite Haverty's advantageous geographic positioning, with a significant presence in the Carolinas, Georgia, Florida, and Texas, Sidoti expressed concerns over the broader furniture industry's recovery.
The firm pointed to the Federal Reserve Bank's current stance on interest rates and the impact of a recent higher-than-expected Consumer Price Index (CPI) report, suggesting that a near-term recovery is unlikely.
Consequently, Sidoti has revised its sales and earnings forecasts for Haverty. The firm now projects an earnings per share (EPS) of $2.67 for 2024, down from the previous estimate of $2.85. The 2025 EPS estimate has also been reduced slightly by $0.02 to $3.78.
For the first quarter of 2024, Sidoti estimates that same-store sales have declined by 12%, with total sales likely falling 11.5% to $199.0 million, compared to the earlier projection of $209.1 million. The EPS for the same quarter is now estimated at $0.35, down from the previous forecast of $0.43.
Despite the reduced forecasts, Sidoti projects that Haverty will generate an average annual free cash flow per share of $2.39 in 2024-2025. The firm anticipates that the company will continue to prioritize shareholder returns through dividends and share buybacks due to the expected excess cash flows.
Sidoti has set a new stock price target for Haverty at $42, which is based on 11 times the revised 2025 EPS projection of $3.78. This new target reflects a decrease from the previous target of $3.80 per share. The updated estimates come ahead of Haverty's first-quarter earnings report, scheduled for release on May 1, 2024.
InvestingPro Insights
As investors consider the analysis provided by Sidoti on Haverty Furniture Companies Inc . (NYSE: HVT), it's worth noting some key metrics and insights from InvestingPro. The company's impressive gross profit margin of 60.67% in the last twelve months as of Q4 2023 stands out, indicating strong operational efficiency in generating profits from sales.
Moreover, Haverty's ability to consistently pay dividends is highlighted by its track record of maintaining dividend payments for 50 consecutive years, which can be appealing to income-focused shareholders.
The current dividend yield of 6.84% is substantial, and the company's price-to-earnings (P/E) ratio of 8.77 suggests that the stock may be undervalued relative to its earnings. With a market capitalization of $495.85 million, Haverty's financial stability is further supported by the fact that its liquid assets exceed short-term obligations, and its cash flows can sufficiently cover interest payments.
These factors could provide a degree of resilience despite the challenging market conditions noted by Sidoti.
Investors interested in a deeper analysis of Haverty can find additional InvestingPro Tips on the company's profile, including insights into net income projections and debt levels. For those looking to make an informed investment decision, using coupon code PRONEWS24 will secure an additional 10% off a yearly or biyearly Pro and Pro+ subscription, offering access to a total of 9 InvestingPro Tips for Haverty Furniture Companies Inc.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.