Despite continued supply chain constraints and other macro headwinds, the furniture industry has boomed over the past two years, driven by strong demand for comfortable home furnishings amid prolonged remote lifestyles. and a hybrid working environment. Additionally, increased government spending on real estate development through commercial and residential projects is expected to contribute to the growth of the industry.
The U.S. furniture market is expected to generate $239.40 billion in revenue in 2022. According to a report by ReportLinker, the global furniture market is expected to reach $945.53 billion by 2030, growing at a CAGR of 4 .5%. Increased adoption of online furniture shopping is expected to drive the industry’s growth and revenue.
So, given the industry’s bright growth outlook, we think it might make sense to invest in stocks of high-quality furniture companies Ethan Allen Interiors Inc. (ETD), La-Z-Boy Incorporated (LZB) and Bassett Furniture Industries, Incorporated (BSET).
Ethan Allen Interiors Inc. (AND D)
ETD is a Danbury, Connecticut-based interior design company that manufactures and retails home furnishings in the United States, Mexico, Honduras and Canada. The Company operates through two segments: Wholesale; and Retail. Its products include storage items, including beds, tables, entertainment units and home office furniture; home accent items, such as wall hangings, mattresses, bedspreads, rugs, and home and garden furniture; and upholstery consisting of sleepers, recliners and other movable furniture.
On April 27, ETD’s board of directors increased the company’s regular quarterly cash dividend by 10% to $0.32 per share. “Today’s board decision highlights our strong balance sheet enabling these returns to shareholders. We believe that we are well positioned thanks to our relevant offers, our strong retail network, the personalized service of our interior design professionals combined with technology and our unique vertical integration structure,” said said Farooq Kathwari, CEO of ETD.
In February, ETD expanded its manufacturing in North Carolina by purchasing, through its subsidiary Ethan Allen Operations, Inc., certain fixed assets of Dimension Wood Products, Inc., a manufacturer of wood framing and machined parts. located in Claremont. , North Carolina. This should increase the company’s control over raw materials, purchased parts, and labor costs.
ETD’s net sales increased 11.7% year-over-year to $696.33 million during its third quarter of fiscal 2022, which ended March 31, 2022. Its gross profit adjusted improved 17.8% year over year to $119.46 million. Its adjusted operating profit rose 59.9% year-over-year to $31.30 million. Additionally, the company’s Adjusted Net Earnings and Adjusted EPS were $23.70 million and $0.93, respectively, up 61.5% and 60.3% from the period. of the previous year, respectively.
ETD’s gross profit margin of 59.47% over 12 months is 66% higher than the industry average of 35.82%. The stock’s 12-month ROCE of 24.28% is 39.1% above the industry average of 17.45%.
The consensus revenue estimate of $199.30 million for its fiscal 2022 fourth quarter, ending June 30, 2022, represents an 11.8% improvement over the same period last year. Analysts expect the company’s EPS for the current quarter to be $0.81, representing an 8.8% year-over-year increase. Not surprisingly, it has exceeded consensus EPS estimates in each of the past four quarters.
The stock has gained 3% in price over the past nine months and closed yesterday’s trading session at $23.25.
ETD’s POWR ratings reflect this promising outlook. It has an overall rating of B, which is equivalent to Buy in our proprietary rating system. POWR ratings rate stocks on 118 separate factors, each with its own weighting.
ETD has an A rating for quality. Within the home and property improvement industry, it is ranked #10 out of 63 stocks. To view additional POWR (Stability, Growth, Momentum, Value, and Sentiment) ratings for ETD, click here.
La-Z-Boy Incorporated (LZB)
LZB in Monroe, Michigan, manufactures, markets, imports, exports, distributes and retails upholstered furniture products, accessories and furniture products in the United States, Canada and abroad. The Company operates through two segments: Wholesale; and Retail. It sells its products directly to La-Z-Boy Furniture Galleries stores, operators of La-Z-Boy Comfort Studio locations, resellers and other independent retailers. It operates over 159 company-owned La-Z-Boy Furniture Galleries stores.
During its third quarter of fiscal 2022, ended January 22, 2022, LZB’s sales increased 21.6% year-over-year to $571.57 million, and its gross profit improved 9% from the previous year’s value to $219.37 million. The company’s operating profit was $39.49 million, up 14.7% year-on-year. Additionally, its net income attributable to LZB per share rose 4.8% year-over-year to $0.65.
LZB’s gross profit margin of 39.55% over the last 12 months is 10.4% higher than the industry average of 35.82%. Its 12-month ROTC of 10.27% is 37.8% higher than the industry average of 7.45%.
Analysts expect LZB’s revenue for its fiscal year 2022, ending April 30, 2022, to be $2.34 billion, a 34.7% increase over the prior year. . The company has exceeded consensus revenue estimates in each of the past four quarters. Additionally, the Street expects the company’s current-year EPS to rise 13.2% year-over-year to $2.97.
Shares of LZB are down 5.5% over the past month and closed yesterday’s trading session at $25.44.
LZB’s strong fundamentals are reflected in its POWR ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.
LZB has a B rating for quality. Within the home and property improvement industry, it is ranked #8 out of 63 stocks. To view additional POWR (Growth, Momentum, Stability, Value, and Sentiment) ratings for LZB, click here.
Bassett Furniture Industries, Incorporated (BSET)
BSET manufactures, markets, distributes and retails home furnishings in the United States and around the world. The Bassett, Virginia-based company operates through three segments: Wholesale; Stores owned by a retail company; and logistics services. It operates over 63 company-owned stores and 34 licensee-owned stores. In addition, BSET owns and leases retail store properties and distributes its products through other multi-line furniture stores, mass merchants and specialty stores.
In March, BSET’s Board of Directors declared a special dividend of $1.50 per share, which was paid on April 6, and a regular quarterly dividend of $0.14 per share, which was paid on April 27. may. In addition, the company increased its authorization to buy back shares. at $40 million. “We will use our operating cash flow and our balance sheet to invest more aggressively in our business. In the meantime, we will continue to be opportunistic with share buybacks while continuing to evaluate our capital allocation strategy,” said Rob Spilman, President and CEO of BSET.
BSET’s furniture and fixtures net sales increased 15.9% year-over-year to $117.86 million in the first quarter of fiscal 2022, which ended February 26, 2022. Its gross profit increased 7.5% year over year to $57.39 million. The company’s operating profit was $6.48 million, up 16.5% year-on-year. Its net profit and earnings per share amounted to $5.57 million and $0.57, respectively, registering an increase of 38.9% and 42.5% compared to their values a year ago.
BSET’s gross profit margin of 45.12% over the last 12 months is 26% higher than the industry average of 35.82%. Its asset turnover ratio of 1.21% over the last 12 months is 17.2% higher than the industry average of 1.03%.
Analysts expect BSET’s EPS for its third quarter of fiscal 2022, ending August 31, 2022, to be $0.49, indicating a 56.5% year-over-year increase. ‘other. The stock is up 9.5% over the past three months and 12.4% over the past six months to close yesterday’s trading session at $17.23. Moreover, its gain since the beginning of the year translates into 12.8%.
BSET’s POWR ratings reflect a strong outlook. The stock has an overall rating of B, which translates to Buy in our POWR rating system.
BSET has an A rating for quality and a B rating for value. It is ranked #7 out of 63 stocks in the home and property improvement industry. Click here to see BSET’s POWR Ratings for Sentiment, Growth, Stability and Momentum
ETD shares were trading at $23.01 per share on Wednesday morning, down $0.24 (-1.03%). Year-to-date, the ETD is down -10.33%, compared to a -12.40% rise in the benchmark S&P 500 over the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using its fundamental approach to stock analysis, Mangeet seeks to help retail investors understand the underlying factors before making investment decisions. After…
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