Defensive Investor Finds Hooker Furniture Attractive

Hooker Furniture Corporation (HOFT) was incorporated in Virginia in 1924, so it is celebrating its 95th year of operations as one of the nation's five largest publicly traded furniture sources. HOFT is a designer, marketer, and importer of casegoods (wood and metal furniture, leather furniture, and fabric upholstered furniture. It serves the residential, hospitality and contract (primarily senior housing) markets. With only 11.785 million shares outstanding, its market cap (based on a 4/26/2019 closing price of $29.03/share) is only $342.1 million, putting it a "below the radar" of many institutional investors, but larger than Bassett Furniture (BSET) or Flexsteel Industries (FLXS), but slightly smaller than Ethan Allen Interiors (ETH).

The stock has dropped from around $50/shr last fall to its current level of about $29/shr, I suspect largely due to concerns about tariffs on furniture and components imported from China. More than 80% of HOFT's net sales come from imported casegoods and upholstered furniture, most of which is sourced from China and Vietnam. HOFT seems to have largely managed through tariff issues so far, through a combination of modest price increases, accelerated inventory purchases (before the tariffs went into effect) and re-sourcing product through non-impacted countries. Another Seeking Alpha contributor just recently posted an article (link here) with a fairly detailed explanation of the company, its markets and risks. I will not repeat that material, but I also believe the stock is interesting at these levels.

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https://seekingalpha.com/article/4258523-defensive-investor-finds-hooker-furniture-attractive?source=feed_all_articles

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