Williams-Sonoma, Ethan Allen, Haverty and Bassett
The continued trend of remote work has prompted people to focus on home renovations to improve quality of life. Additionally, with the housing market remaining resilient, demand for home furnishings remains strong. Sales of furniture and fixtures rose 7.2% in January.
Additionally, the increased demand for comfortable, quality furniture is expected to help manufacturers overcome high wood prices by increasing the price of products. The US furniture industry is expected to generate total revenue of $239.37 billion in 2022 and growing at a CAGR of 3.5% over the next four years.
So we think it might make sense to bet on fundamentally sound furniture stocks Williams-Sonoma Inc.(WSM), Ethan Allen Interiors Inc.(AND D), Haverty Furniture Companies, Inc.(HVT) and Bassett Furniture Industries, Inc. (BSET) to take advantage of the growing industry trend.
Williams-Sonoma Inc. (WSM)
WSM is an omnichannel specialty retailer of multiple home products. It also provides kitchen, catering and entertainment products such as kitchen utensils, tools, electrical appliances, cutlery, tables and bars, outdoor furniture and a library of cookbooks under the Williams Sonoma brand, as well as home furnishings and decorative accessories under the Williams Sonoma Home brand. Mark; and furniture, bedding, lighting, rugs, tableware and decorative accessories under the Pottery Barn brand.
Last month, Pottery Barn Kids and Pottery Barn Teen, members of WSM, announced new collections with popular resort clothing brand Lilly Pulitzer. The “Lilly Pulitzer x Pottery Barn Kids” and “Lilly Pulitzer x Pottery Barn Teen” collections launched new product categories under the partnership, including home décor, textiles, sleepwear, backpacks and water bottles in iconic Lilly Pulitzer prints. Jennifer Kellor, President of Pottery Barn Kids and Pottery Barn Teen, said, “Our collaboration with Lilly Pulitzer is the result of coming together as brands who value incredible design with exceptional quality.
Additionally, in January, WSM announced its collaboration with Black Artists + Designers Guild (BADG), a global organization committed to developing a more equitable and inclusive creative culture through the enhancement of independent black makers. The new collaboration between Pottery and Barn and BADG includes products designed to entertain, welcome and bring people together.
WSM’s net sales increased 16% year-over-year to $2.05 billion in the third quarter ended October 31, 2021. Its operating profit increased 16.1% from the previous year’s value to reach $330.27 million, while its net profit improved by 12.2% year on year. over one year to $249.52 million over the period. The company’s non-GAAP EPS rose 30% from the prior year quarter to $3.32.
Analysts expect WSM’s revenue to grow 12.4% year over year to $2.58 billion in the fourth quarter (ending January 2022). The company’s EPS is expected to rise 22.3% year over year to $4.83 in the fourth quarter. Additionally, the company has an impressive track record of earnings surprises, as it beat consensus EPS estimates for the past four quarters. The stock has gained 4.1% over the past year.
WSM POWR Rankings reflect this promising prospect. The company has an overall rating of B, which translates to Buy in our proprietary rating system. POWR ratings rate stocks on 118 different factors, each with its own weighting.
WSM is also rated A for quality. Within the Home improvement and goods Industry, it is ranked #15 out of 62 stocks.
To view additional POWR Ratings for Growth, Value, Stability, Sentiment and Momentum for WSM, Click here.
Ethan Allen Interiors Inc.(AND D)
ETD operates as an interior design company, manufacturer, and home furnishings retailer in the United States, Mexico, Honduras, and Canada. It mainly operates in two segments, wholesale and retail. The company markets and distributes its products under the Ethan Allen brand through home furnishings retail networks and individual dealers and through the ethanallen.com website.
This month, ETD announced that it had further strengthened its vertically merged business. Through its subsidiary, Ethan Allen Operations, Inc., the Company purchased certain property, plant and equipment from Dimension Wood Products Inc., a manufacturer of wood framing and machinery parts. Farooq Kathwari, President of Ethan Allen, said Dimension Wood Products’ talented associates, workshop and machinery will help them increase their control over raw materials, parts purchasing and labor costs. , and maintain their high quality standards.
Additionally, this month ETD opened its seventh location in Connecticut: a new Design Center in Westport. The new Design Center displays ETD’s unique take on American style while bringing ETD’s acclaimed interior design service, enhanced by 3D digital design tools, to the forefront.
During the second quarter ended December 31, 2021, ETD net sales increased 16.4% year-over-year to $208.09 million. His operating result increased 60.9% from the prior year’s value to $36.29 million, while its adjusted net income increased 38.6% from the prior year’s quarter to 24, $26 million. The company’s adjusted EPS rose 37.7% year-over-year to $0.95.
The consensus EPS estimate for the third quarter ended March 2022 represents a 30.2% year-over-year improvement to $0.76. Analysts expect revenue to grow 11.4% year-over-year to 197.10 million for the third quarter ending March 2022. Plus, it has an impressive history of surprises on earnings, as it has exceeded consensus EPS estimates for the past four quarters.
ETD’s strong fundamentals are reflected in its POWR ratings. The stock has an overall rating of B, which is equivalent to Buy in our POWR rating system. The stock also has an A rating for quality. In the same sector, it is ranked #11.
In total, we rate ETD on eight different levels. Beyond what we’ve stated above, we’ve also assigned ETD ratings for Growth, Value, Stability, Momentum, and Sentiment. Get all ETD odds here.
Haverty Furniture Companies, Inc. (HVT)
HVT is a specialty retailer of home furnishings and accessories. The company provides furniture under the Havertys brand, custom upholstery products, eclectic looks and Skye private label mattress lines from the Sealy, Tempur-Pedic and Serta names.
During the fourth quarter ended December 31, 2021, HVT’s net sales increased 10.2% year-over-year to $265.9 million. Gross profit rose 9% from the value a year ago to $150. The company’s net income was $24.31 million, while its EPS was $1.35 over the period.
HVT is expected to experience revenue growth of $1.03 billion, or 1.3% year-over-year growth in fiscal 2022. The consensus EPS estimate of $4.78 for fiscal year 2023 indicates a 4.60% year-over-year improvement. Additionally, the company has an impressive track record of earnings surprises, as it beat consensus EPS estimates for the past four quarters.
HVT’s POWR ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. HVT is also rated A for quality and value. Within the same industry, it is ranked #14.
Click here to see additional POWR ratings for Growth, Stability, Sentiment and Momentum for HVT.
Bassett Furniture Industries, Incorporated (BSET)
BSET operates as a manufacturer and retailer of home furnishings in the United States and around the world. Wholesale; Company-owned retail stores; and logistics services are the three main segments through which it operates. The Company is also engaged in the design, manufacture, supply, sale and distribution of furniture products.
For the fourth quarter ending November 27, 2021, BSET’s net sales increased 9.7% year-over-year to $129.90 million. Its operating profit was $7.11, while its net profit was $5.04 million. The company’s EPS was $0.52 over this period.
The consensus EPS estimate of $1.91 for fiscal 2022 represents a 4.4% year-over-year improvement. The analyst expects revenue to grow 3.3% year-over-year to $466.24 million in fiscal 2023. Plus, it has an impressive history of surprises in earnings as it has exceeded consensus EPS estimates for the past four quarters.
It’s no surprise that BSET has an overall rating of B, which equates to Buy in our POWR rating system. The stock also has an A rating for quality and a B for value. In the same industry, it is ranked #10.
In addition to the POWR Ratings ratings I just highlighted, you can see BSET ratings for growth, momentum, sentiment and stability.
WSM shares were trading at $140.85 per share on Thursday afternoon, up $6.93 (+5.17%). Year-to-date, the WSM is down -16.32%, compared to a -9.82% rise in the benchmark S&P 500 over the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college, she majored in finance and is currently pursuing the CFA program and is a Level II candidate. Continued…