Summary
- HVT came up on a screen for companies with no debt, decent dividends, and low EV/EBITDA.
- Haverty sells furniture throughout the Southeast and Midwest United States.
- The company has recently been hit hard by tariffs, creating a buying opportunity.
- Stable yields, a strong balance sheet, and a steady base with opportunity for significant recovery in the stock price.
Overview
Haverty Furniture Companies, Inc.'s (NYSE:HVT) stock is currently undervalued and offers a sustainable yield to investors. Tariffs have impacted Haverty's suppliers and directly caused the Q1 2019 earnings miss, which has led to a sell-off in the stock. I view this as a buying opportunity, given Haverty's strong balance sheet, history of returning capital to shareholders and the ability to recover from the negative impacts of the tariffs.
Haverty was founded in 1885 and its stock started trading publicly in 1929. The company sells furniture and accessories (including Haverty's exclusive pieces and customization options) in the "middle to upper-middle price ranges" at stores through the U.S. Midwest and Southeast, with headquarters in Atlanta, Georgia.
Image: Haverty's store locations (Image source: Haverty)
Financing, design consultation and delivery services are offered to the customer. As of December 31, 2018, the company had 120 showrooms in 16 states. Haverty is also committed to sustainability, processing nearly 100% of their recyclable materials, and reducing their electric energy consumption by 46% in 2018 from 2008 levels.
(Image source: TDA Thinkorswim)
As can be seen on the three-year chart above, the stock has had a trading range from about $17 to $27. Dividend payments have been consistent in this time period and will be covered later in the article. However, it is important to note that this is a stock that returns capital to shareholders primarily through dividends. Investors looking for a high growth company should look elsewhere. Recently, a major sell-off occurred in the stock after the most recent earnings release, which missed analyst expectations.
