) has been moving higher since reporting solid fiscal second
quarter results last month, which included an earnings surprise of
nearly 50%. In addition, this Zacks #1 Rank (Strong Buy) mattress
fabrics company has a compelling valuation, including a
price-to-sales (P/S) ratio of just 0.66 and a price-to-book (P/B)
multiple as low as 1.86.
Solid Second Quarter Results
On November 27, Culp Inc. reported fiscal second quarter earnings
of 31 cents per share, topping the Zacks Consensus Estimate by
47.6% and advancing from last year's performance by 72.2%. Looking
at the earnings surprise history, the company has outperformed the
Zacks Consensus Estimate in 3 of the last 4 quarters, with an
average surprise of 14.5%.
Net sales of $65.6 million comfortably surpassed the Zacks
Consensus Estimate of $60 million and grew 13.0% year over year,
reflecting sales increases across Mattress Fabrics (up 12.6%) and
Upholstery Fabrics (up 13.6%).
Management expects fiscal third quarter 2013 sales to increase 4%
to 9%, versus the prior-year quarter.
Rising Earnings Estimates
Over the past 30 days, both estimates for fiscal 2013 were revised
upward, lifting the Zacks Consensus Estimate by 5.8% to $1.28 per
share. This indicates year-over-year growth of 42.2%. The Zacks
Consensus Estimate for fiscal 2014 increased 27.7% in the same
timeframe to $1.43 per share, as both estimates, again, moved
upward. This reflects a year-over-year increase of 11.3%.
Along with low P/B and P/S multiples, Culp trades at a forward P/E
ratio of 11.37 (a P/E ratio under 15.0, P/B ratio below 3.0 and a
P/S ratio below 1.0 generally indicate value). It has a trailing
12-month ROE of 15.1%, compared with the peer group average of
Chart Showing Consistent Rise
Shares of Culp have been rising since September 2012 and reached a
52-week high of $14.76 on December 12, Moreover, the stock is
currently trading above its 50- and 200-day moving averages, which
stand at $12.59 and $10.78, respectively.
Volume is averaging roughly 53K daily. Culp has outperformed the
S&P 500 in the last month. The year-to-date return for the
stock is 70.76% compared with the S&P 500's return of 13.72%.
Culp, Inc. is a manufacturer and marketer of mattress fabrics used
in covering mattresses and box springs, as well as upholstery
fabrics principally used for residential and commercial furniture.
The company operates through two segments, Mattress Fabrics and
Upholstery Fabrics. Culp, which competes with International Textile
Group, Inc. (
), has a market cap of $177.5 million.
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