The demand for furniture and related home improvement products has increased significantly thanks to the widespread adoption of remote lifestyles amid the COVID-19 pandemic. The furniture industry is expected to continue seeing solid demand throughout the remainder of 2021 because remote lifestyles are expected to continue, at least in part.
One of the largest upscale home furnishings companies, RH (RH), had a solid rally over the past year, capitalizing on the industry tailwinds. The company’s strong financials helped it become one of the industry’s winners. RH’s net revenue increased 78.3% year-over-year to $860.79 million in its fiscal first quarter, ended May 1, while its net income improved 4,167.7% from its year-ago value to $130.66 million. The company’s EPS increased 2564.7% year-over-year to $4.19. Shares of RH have gained 7.6% since the release of its first quarter results on June 9. The stock has gained 47% year-to-date, and 38.4% over the past three months.
While RH may have run too far too fast, we believe there is still upside remaining in furniture stocks Williams-Sonoma, Inc. (WSM), Haverty Furniture Companies, Inc. (HVT), and Bassett Furniture Industries, Incorporated (BSET). These companies have expanded their offerings substantially over the past couple of months and possess strong financials.
Williams-Sonoma, Inc. (WSM)
WSM is the world’s largest digital-first, design-led sustainable home retailer that offers a wide range of products for home décor. The company owns and operates retail stores in the United States, Canada, Puerto Rico, Australia, and the United Kingdom, and franchises its brands to third parties in several countries in the Middle East, the Philippines and Mexico.
On June 15, the company partnered with Capital One Financial Corporation (COF). Under the agreement, customers that shop at WSM using COF credit cards are entitled to enhanced reward points and benefits, thereby lowering the overall costs of products. Such discounts should boost WSM sales significantly.
On May 14, Pottery Barn, a portfolio brand of WSM, announced its collaboration with iconic travel trailer Airstream, and unveiled a new collection of décor and accessories. In the past few months, WSM has collaborated with several best-in-class brands, such as Casamigos, EttaVee by artist and influencer Jessi Raulet, Nutella®, and Trisha Yearwood to expand its product offerings and attract more customers.
WSM’s net revenues increased 41.6% year-over-year to $1.75 billion in its fiscal first quarter, ended May 2. Its operating income grew 465.7% from its year-ago value to $275.18 million, while its net income improved 543.1% year-over-year to $ 227.80 million over the period. The company’s EPS increased 544.4% year-over-year to $ 2.90.
A $7.65 billion consensus revenue estimate for the current year indicates a 12.80% improvement from the last year. Analysts expect the company’s EPS to come in at $11.76 for the current year, indicating a 30.1% rise year-over-year. WSM surpassed the Street’s EPS estimates in each of the trailing four quarters, which is impressive.
WSM has gained 56.9% year-to-date. The stock has gained 87.3% over the past year.
WSM has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
WSM has a grade of A for Momentum and Quality, and B for Value and Sentiment. It is ranked #9 of 65 stocks in the A-rated Home Improvement & Goods industry.
Beyond what we’ve stated above, we have also rated WSM for Growth and Stability. Click here to view all WSM Ratings.
Haverty Furniture Companies, Inc. (HVT)
HVT is a retailer of residential furniture and accessories. The company offers a vast array of home furnishing products, including custom upholstery products and eclectic looks and mattress product lines.
HVT’s net sales increased 31.8% year-over-year to $236.49 million in its fiscal first quarter, ended March 31. Its net income stood at $19.41 million, up 966.8% from the same period last year. The company’s EPS increased 1055.6% year-over-year to $1.04. Its cash and cash equivalents balance rose 137.6% from the prior year quarter to $216.84 million over this period. And on May 14, HVT announced a 13.6% increase in its quarterly dividend.
A $218.95 million consensus revenue estimate for its fiscal second quarter (ending June 2021) indicates a 99% increase year-over-year. The Street expects the company’s EPS to rise 257.7% from the prior year quarter to $0.82 in the current quarter. HVT also beat consensus EPS estimates in three of the trailing four quarters. HVT gained 155% over the past year and 61.3% year-to-date.
It’s no surprise that HVT has an overall rating of A, which equates to Strong Buy in our proprietary POWR Ratings system. HVT also has an A grade for Value, Momentum and Quality. It is ranked #6 in the Home Improvement & Goods industry.
Click here to view additional HVT Ratings for Growth, Sentiment and Stability.
Bassett Furniture Industries, Incorporated (BSET)
BSET manufactures and markets home furnishings. It also provides shipping and warehousing services to its customers. It operates in three segments: wholesale, retail company-owned stores, and logistical Services.
On April 26, BSET opened a new manufacturing facility in Newton, North Carolina to expand its production capacity in response to rising wholesale orders. Wholesale order volume rose 125% year-over-year in March and is expected to increase in the near term. The company also expects its upholstery business to grow by 20% over the long term.
BSET’s wholesale orders increased 44% from their year-ago value to $83 million in its fiscal first quarter ended February 27. Its total revenue increased marginally year-over-year to $113.67 million. Its net income stood at $4.01 million, up 231.5% from the same period last year. And its income from operations grew 172.4% from the year-ago value to $6.02 million. The company’s EPS increased 233.3% year-over-year to $0.40.
The Street expects BSET’s revenues to increase by 20.6% year-over-year to $465.17 million in 2021. A $1.76 consensus EPS estimate for the current year indicates a 267.6% improvement year-over-year. BSET has an impressive earnings surprise history as well; it beat the consensus EPS estimates in three of the trailing four quarters. Shares of BSET have gained 300.4% over the past year, and 45.2% year-to-date.
It’s no surprise that BSET has an overall B rating, which equates to Buy in our POWR Ratings system. BSET has an A grade for Momentum and Quality, and a B for Sentiment. It is ranked #13 in the same industry.
To see additional POWR Ratings for Growth, Stability and Value, click here.
RH shares were trading at $641.05 per share on Thursday afternoon, down $16.72 (-2.54%). Year-to-date, RH has gained 43.24%, versus a 12.63% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.Missed the Move in RH? Here’re 3 Other Furniture Stocks That Could Surge appeared first on StockNews.com