Extreme weather conditions are currently taking a toll on the
housing industry but once weather conditions improve, the industry
may bounce back. Further, upper-end residential segment of the
industry remains resilient to higher mortgage rates and it is
expected to maintain its positive momentum during 2014.
About the Company
The Dixie Group (
is a manufacturer and of marketer of carpet and rugs to high-end
residential customers through the Fabrica International, Masland
Residential and Dixie Home brands. The company began its
operations in 1920 and transitioned from textiles to floorcovering
in the 1990s.
In 2004, it refined its focus on upper-end markets-both commercial
and residential. The company is known for its innovative styling,
design and colors.
Excellent Fourth Quarter Earnings
On Feb 19, DXYN reported its fourth quarter operating results.
Sales jumped 34.7% year-over-year to $95.8 million--highest level
since the company's reconfiguration in 2003. The company recorded
growth in all areas of the business, with residential products up
30.5% and commercial products up more than 45%.
Dixie's performance was significantly better than industry both in
the commercial and residential products for both the quarter and
the year. During FY 2013, 58% of the sales were derived from the
residential market, while 42% were from the commercial market.
Adjusted operating income of $0.12 per share was substantially
ahead of the Zacks Consensus Estimate of $0.05 per share. Dixie has
delivered positive earnings surprises in all of the last four
quarters-with an average quarterly surprise of 185%.
It appears that the growth initiatives adopted by the company
during 2012 including continued investments in new products and
processes, are finally delivering results.
Positive Earnings Estimates Revisions
After excellent fourth quarter results, analysts have revised their
earnings estimates for the company in the past few days. Zacks
consensus estimates for the current year and the next year now
stand at $0.72 per share and $1.05 per share respectively, up from
$0.67 per share and $1.01 per share, 7 days ago.
Rising estimates sent DXYN back to a Zacks Rank # 1 (Strong Buy)
last week. The company was earlier featured as the "Bull of the
Day" on September 4, 2013. The stock is up more than 40% since
Solid Industry Outlook
While rising interest rates seem to be affecting the housing market
in general, the high-end segment of the market continues to be
resilient. Further remodeling activity remains on the
uptrend-which is positive for the carpet and floor covering segment
of the home-furnishing industry.
That said, the results for the first quarter will likely suffer
from weather related issues--Jan sales were up 2.3% and Feb sales
were about 16% so far--but the company looks poised to pick up
growth once the weather conditions improve.
Textile and home-furnishing industry currently has a Zacks Industry
Rank of 10 out of 265 (top 4%).
Further, Dixie continues to stay significant ahead of the market in
terms of performance. Per management, their carpet sales have grown
68% since the housing downturn in 2009, compared with just 12%
growth for the industry.
The Bottom Line
DXYN is a Zacks Rank#1 (Strong Buy) stock. Further top Zacks
Industry Rank also indicates strong chances of outperformance in
the short- to medium- term.
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DIXIE GRP INC (DXYN): Free Stock Analysis
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