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Hooker Furniture Corp. (HOFT) offers high quality furnishing, design, and development of furniture products throughout North America. It serves retailers of residential homes as well as independent, department stores, and national chains. Headquartered in Martinsville, Virginia, Hooker Furniture Corp. is one the nation's top 10 largest publicly traded furniture sources.

As new and existing home sales are steadily increasing, small cap household furniture companies such as HOFT can also be expected to rise. A report from the National Association of Realtors announced that the housing market is on its way to recovery from the bust and show encouraging signs of sustained growth. Previously owned home sales rose in March, reaching highest levels in more than three years and are likely to continue its rebound as shares of foreclosure purchases shrink. Moreover, homes sold in April were on the market for a median of 46 days, almost half the amount from a year earlier. The median price of home sale is up 11 percent from last year as home sellers are beginning to take advantage of the spring and summer buying season. Price appreciation along with higher housing turnover bodes the end to a struggling housing market that has lasted for the past six years. It is now clear that the market has begun to turn around and causing positive momentum to related markets.

When new houses are purchased, a myriad of economic activities occur from appliances, property alterations, and of course furnishing expenses. In fact, according to the Consumer Expenditure Survey conducted by the U.S. Bureau of Labor Statistics, the biggest expense in the budget of new home buyers is furnishing. During the first year, buyers spend $5,288 on furnishing which is 2.2 times the amount of existing home owners and 5.3 times as much as non-moving owners. Bedroom furnishings, including mattresses take the biggest outlay in a buyers furnishing budget as they spend $959 compared to $463 of existing home buyers. It is increasingly evident that new home buyers trigger a wave of additional consumption that outspends existing home buyers by a tremendous margin.

The momentum of the housing market directly correlates to the furniture industry and bodes well for HOFT. Comparable to HOFT, Mohawk Industries (MHK) is a flooring manufacturer dealing with carpets, rugs, stone, etc. With an impressive first quarter earnings, analysts have estimated higher earnings for 2013 and 2014. HOFT and MHK, among industries correlated to housing have tremendous growth potential in the coming years.

One of HOFT's biggest competitors is Leggett & Platt, Inc. (LEG), which manufacturers and engineers bedding and furniture products used in homes, offices, transportation and retail. The company has been operating in an aggressive environment as it competes with numerous distributors and producers of home products. However, investors are concerned with the rising competition in this market and increasing material costs that could adversely affect Legett & Platt, Inc. Furthermore, the foreign exchange restrictions imposed on Legett & Platt, Inc. may have effect on subsidiaries located outside U.S. land.

HOFT's income for 2013 rose 71% compared to 2012 and the company has no long-term debt in store. It has a forward P/E of 18.1, expected earnings growth for fiscal 2014 of 18.8%, offers a yield of 2.42%, and a market cap of $184 million. Furthermore, HOFT has a dividend yield of 3% and a payout ratio of 80.3%. With the improving housing market, shares are trading near multi-year highs. With neutral outlook on competing firms, HOFT seems to be positioned to be one of the key beneficiaries of an expanding and improving housing market.

Source: Hooker Furniture Seeing The Benefit Of Improving Housing Market