HVT - Haverty Furniture: Conflicted About This Home Furnishing Retailer (Rating Downgrade)

2024-04-23 04:28:58 ET

Summary

• Haverty is staring at weaker Sales, GM, and EPS outlook in FY24, yet forward valuations work out to a 60% premium over the rolling 5-year average.
• The cash conversion cycle has scope to improve and CAPEX commitments this year will drop off by 40%, providing a useful uplift for FCF generation and a pickup in buybacks.
• We like the risk-reward on the standalone chart, and Haverty could benefit from rotational interest given its low RS ratio vs other discretionary offerings.
• In light of some conflicting sub-plots, we think a HOLD rating feels fitting.

Introduction

The stock of Haverty Furniture Companies ( HVT ) ( HVT.A ), a specialty retailer of residential furniture and accessories, has encountered an underwhelming 12 months. Over the past year, the S&P500 has generated healthy returns of nearly 22%, but during this period, Haverty has not even managed to generate half the returns of the US benchmark....

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