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Flexsteel Industries Inc. Message Board

  • doubledownposse doubledownposse Dec 17, 2008 1:24 AM Flag

    No position...but

    Selling at half book value and not making much of a profit...why doesn't management either liquidate this thing or buy it out?

    What do these guys do all day?

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    • doubledown:

      Are you still out there?

      FLXS was able to more than keep the doors open. Record net income for the quarter and the year.

      Book value per share is now about $17.50 and FLXS has no debt and over $8,000,000 in cash.

      I predict more good things for the stock price. I expect that the Value Line investment service will raise the timeliness ranking for FLXS to number 1 soon. I also expect that FLXS will increase its dividend by a good percentage soon. These potential actions along with continued operating performance by FLXS should propel the stock higher in my estimation.

      I am very happy that I am long FLXS in a material way.

    • I received the annual report this week.

      In truth, it is hard not to root for this company and companies like this.

      Sad to say they are fighting an uphill battle. It could be 10 or 20 years until consumer spending really revives in the U.S. You never know, it could be sooner, but there are a lot of people that are going to live a lot more conservatively going forward.

      At the very least it appears Flexsteel will be able to keep the doors open for some time.

    • doubledown:

      I think you are right that the management has done a good job under difficult circumstances. I am particularly impressed with the reduction of debt. I wish they could reduce the inventory some more and eliminate the interest bearing debt entirely.

      In view of the company's long history and its recent performance, I don't think that it should sell at barely over 50% of book value. I have built a rather large position in the stock so I will let others now figure out what it is worth.

    • Results were good all things considered, question now is there any real growth possible. They have already shrunk the balance sheet and laid off 30% of the workforce.

      The company has executed well. But like management said, residential furniture is highly deferable. This could be one of those things that remains in the dumps for 5 or 10 years, and then an incredible boom happens. Who knows.

    • doubledown:

      For a long time I have wished that FLXS would cut its inventory in a large way and use the proceeds to pay down its debt. It never happened until now when the bad economy forced them in that direction. Now we will see how that works out.

    • I like the SCX.

      A cheap little company with a good balance sheet you may want to look at is NATH.

      Many of these furniture stocks have rebounded dramatically. I think Flexsteel is still hampered by the RV division. But, that business has already sustained an 80% hit to sales over the prior two years. Not much downside meat left on that bone.

      I don't know what else FLXS could possibly do. They got out of debt, they scaled back operations, they continue to do $300 million in business, just not very profitably. It appears to me they will survive. I could be wrong.

    • doubledown:

      Welcome back.

      I think you have described the situation with FLXS precisely. NOBODY cares but me. I listened to the replay of the conference call as well, and there were no questions at all, even from the flunky analyststs that had asked questions on prior calls.

      I have been building a pretty large position in FLXS over the last year and my average cost is about $8. I think it is incredibly cheap if it is able to recover to a more normal business environment.

      Did you see the price declines in other furniture stocks and their recoveries? The most dramatic were LZB and FBN. WOW! They now generate large volume but still nobody cares about FLXS but me.

      If you are interested in other cheap small cap stocks, I have three more. They are SCX, WAYN and CUO. They are not without warts, but they all have long histories and have been mostly profitable. None have a great amount of debt and they don't appear to be in business in order to take advantage of their shareholders. They meet most of the Benjamin Graham Intelligent Investor criteria. The market just has no interest in small cap value stocks and they are not in any indexes so they just sit there. I started off my career investing in this sort of merchandise and it simply was not available for the last ten years. We get another chance to buy bargains. Wonderful! Patience will be required.

    • Seeing how nobody has posted and nobody was on the recent earnings call, it is safe to assume that this stock is now completely in Mr. Market's ignore bin.

      That and an extremely low valuation on price to sales, combined with a clean balance sheet, makes this a reasonably safe buy. By reasonably safe, of course on a relative basis. It's still a stock, and business is unpredictable. But I like it in the single digits.

    • You could not be more wrong about Flexsteel.
      It is true that imports are a major part of their basket but as Chinese taxation policies become less predictable and speed to market becomes more important to the upper middle end producers, Flexsteel is well positioned to be a big winner when there finally is a recovery.
      It is easy to hate on all furniture stocks in this economy.
      However, students of the furniture business realize how well FLXS has played it's hand.

    • The company will close factories and have to import everything.
      Its sucks but that the nature of the beast. Its also whats wrong with America.

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