What do you do when you buy a new house or condo? Buy furniture,
of course. Suddenly, that old sectional with the dog hair stuck to
the pillows isn't looking so hot.
Haverty Furniture Companies, Inc.
) is looking to cash in on the housing recovery. This Zacks Rank #1
(Strong Buy) is expected to grow earnings by 63% in 2013.
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
Haverty's 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.
As Housing Improves, So Does Havertys Business
On May 1, Havertys reported its first quarter results which easily
beat the Zacks Consensus by 33%. Consumers were in the mood to shop
to start the year as sales jumped 13.8% to $186.1 million while
same store sales rose 11.5%.
It's not surprising that house sales and median home prices were
rising throughout the quarter and Havertys business remained solid.
Gross profit margins were up 130 basis point to 53.5% from 52.2%.
Gains To Continue
The company also said that the total delivered sales to date for
the second quarter were already running 14% higher over the same
period a year ago.
It did try to temper expectations for the full year, though, saying
that gross profit margins for the year, while improving, won't be
as hot as the first quarter.
Housing Recovery Play Not a Secret
Investors have been all over the housing recovery stocks for the
last year. The improvement in the housing market isn't exactly a
Shares of Havertys have soared since last summer to multi-year
But, its valuation still isn't excessive. It's trading with a
forward P/E of 22 and a price-to-book of just 2.0.
Consumer sentiment is finally reaching pre-recession levels which
means that people believe the economy, and their own personal
fortunes, are improving. The rise in stock and housing prices have
a lot to do with that.
During times that you're feeling better about your financial
situation, that's when you're likely to buy big ticket items like
For investors looking for a way to play the housing recovery
outside of the homebuilders, Havertys is one stock worth checking
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HAVERTY FURNIT (HVT): Free Stock Analysis
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