Haverty Furniture Companies Inc.
) hit a 52-week high on October 11, shortly after announcing strong
third quarter sales. Shares of this home furnishing company have
been rising since its 10-fold earnings surprise in the second
quarter. In fact, the stock is up nearly 38.3% since August 1.
This Zacks #1 Rank (Strong Buy) has been gaining traction due to
its strong sales trends, encouraging outlook, enhanced product
assortments and customer centric initiatives, along with efforts to
boost gross margins and curtail operating costs. Haverty Furniture
will be reporting quarterly results again on October 31.
Third Quarter Sales Surge
On October 4, Haverty Furniture reported net sales of $172.7
million for the third quarter, a gain of 11.1% from the year-ago
quarter. Comparable store sales for the quarter rose 10% over the
Second Quarter 2012 Profits Up
On August 11, Haverty Furniture posted second-quarter earnings of
11 cents per share, soaring past the Zacks Consensus Estimate of 1
cent. This compared favorably with the company's year-ago loss per
share of 4 cents.
Net sales increased 5.9% year over year to $151.5 million, driven
by a 5.6% increase in comparable store sales. The Zacks Consensus
Estimate was at $152 million.
Gross profit margins expanded 130 basis points to 52.6%, driven by
a 160 basis points contraction in selling, general and
administrative costs, as a percent of sales. However, selling,
general and administrative costs in dollar terms increased 2.7%
year over year to $76.4 million, primarily due to variable selling
costs including commissions and incentive compensation.
Looking ahead, the company expects gross margin to be about 52% in
the second half of 2012. Selling square footage is expected to
increase 2.5% in 2012 driven by the opening of new stores in
Maryland, Texas and Atlanta through the rest of the year. Capital
expenditure is projected to be $23.5 million in 2012.
Earnings Momentum Trends Upward
The Zacks Consensus Estimate for 2012 grew nearly 7.7% to 56 cents
per share in the last 30 days, representing a year-over-year surge
of 825.0%. The Zacks Consensus Estimate for 2013 advanced 4.9% to
85 cents per share over the same time frame, signifying a
year-over-year improvement of about 52.3%.
For the soon-to-be announced third quarter, the Zacks Consensus
Estimate is at 12 cents per share, which is up 2 cents in the past
Haverty Furniture currently trades at a forward P/E of 26.9x, a
significant premium to the peer group average of 18.2x. On a price
to book basis, however, shares reflect a 40.8% discount to the peer
group with a trading multiple of 1.22. Similarly, the
price-to-sales ratio reflects a discount of 57.1% to the peer
group, with shares trading at a multiple of 0.51.
The chart below indicates a steady growth in the company's share
price since reporting second quarter 2012 results, reflecting an
upside of about 38.3%. Currently trading close to its 52-week high,
shares of Haverty Furniture have continually outperformed the 50
and 200-day moving averages since almost mid-August this year.
Moreover, the company has outperformed the S&P 500 Index since
August 22, 2012. Haverty Furniture has a market cap of $328.6
million, while average daily trade volume is 43K.
Haverty Furniture Companies Inc. is a full-service home furnishings
retailer operating mainly in the Southern and Midwestern regions of
the United States. Haverty Furniture provides its customers with a
wide selection of furniture and accessories primarily in the middle
to upper-middle price ranges. As an added convenience to its
customers, the company offers financing through a revolving charge
credit plan. The company sells products through its 120 showrooms
in 17 states as well as on the Internet. The company was founded in
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