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5 Home Furnishing Companies With High Strength and Profitability

GuruFocus.com
·4 min read

In light of homebuilder sentiment accelerating during June, five home furnishing stocks with high financial strength and profitability are Fuling Global Inc. (NASDAQ:FORK), Hooker Furniture Corp. (NASDAQ:HOFT), Kimball International Inc. (NASDAQ:KBAL), La-Z-Boy Inc. (NYSE:LZB) and Mohawk Industries Inc. (NYSE:MHK) according to the All-in-One Screener, a Premium GuruFocus feature.


Markets add to Monday's comeback rally on several factors including strong housing data

On Tuesday, the Dow Jones Industrial Average closed at 26,289.98, up 526.82 points or 2.04% from Monday's close of 25,763.16 on the heels of strong economic news from the housing sector and positive news regarding a potential coronavirus treatment. The gains added to Monday's 100-point comeback on the Federal Reserve's announcement it will buy individual corporate bonds to boost credit markets.

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The National Association of Home Builders said that builder confidence in the market for newly built single-family homes climbed 21 points to 58 in June according to the NAHB / Wells Fargo Housing Market Index (HMI) data released on Tuesday. Each of the index's three components surged over 20 points: The current sales index, sales expectations index and prospective buyer traffic index rose 21 points, 22 points and 22 points for the month.

NAHB Chairman Dean Mon said that the record increase in the HMI shows that housing is "poised to lead the economy forward" following the Covid-19 pandemic. Mon added that buyer traffic "more than doubled in one month" as builders report "growing online and phone inquiries stemming from the outbreak." NAHB Chief Economist Robert Dietz added that builders reported increasing demand for single-family homes in low-density, suburban areas.

Opportunities exist in home furnishing companies with high strength and profitability

As the housing market improves, investors might seek opportunities in companies that manufacture and market home furnishings like furniture, mattresses, light fixtures, flooring and wallpaper. Demand for these products could increase as new and existing homeowners buy furniture for their new home or renovate their existing home. The Screener listed five furniture companies that have a financial strength rank of at least 6 and a profitability rank of at least 7, two criteria for high-quality companies.

Fuling Global

Fuling Global, a Chinese plastic tableware manufacturer, produces a wide range of cutlery, portion cups, containers, plates and bowls. GuruFocus ranks Fuling Global's profitability 7 out of 10, driven by returns on equity outperforming over 85% of global competitors and operating margins outperforming 74.7% of global peers despite contracting over the past five years.

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2c7cce3f6a713135f7b1b785a3924713.png

Fuling Global's financial strength ranks 6 out of 10 on the back of debt-to-Ebitda ratios that are safely below Joel Tillinghast's warning level of 4 and outperform 60.32% of global competitors.

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c9f5bcc614a290b7423c08ee65399836.png

Jim Simons (Trades, Portfolio)' Renaissance Technologies owns 55,395 shares of Fuling as of the first-quarter filing date.

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40e25056ff818a1a0419e220c6eb48ba.png

Hooker Furniture

Martinsville, Virginia-based Hooker Furniture designs, markets and imports case goods, leather furniture and fabric-upholstered furniture for the residential, hospitality and contract markets. GuruFocus ranks Hooker Furniture's financial strength 7 out of 10: The company has a strong Altman Z-score of 4.18 despite debt ratios outperforming just over half of global competitors.

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1a92d8fea54cb5ff371d861f84e2ea89.png

Hooker Furniture's valuation ranks 9 out of 10 on the back of price valuations that are close to 10-year lows and outperform over 65% of global competitors.

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616bd707b5b36cc00992ebc57c46f466.png

Gurus with holdings in Hooker Furniture include Chuck Royce (Trades, Portfolio)'s Royce and Associates and Hotchkis & Wiley.

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bcd78dcc016d613851c901698fae5160.png

Kimball

Jasper, Indiana-based Kimball operates in furniture manufacturing through brands like Kimball, National and Kimball Hospitality. GuruFocus ranks Kimball's financial strength 9 out of 10 on several positive investing signs, which include a strong Altman Z-score of 5.76 and interest coverage ratios outperforming over 96% of global competitors.

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ae86b95d321c4e9cfce44f36e54b5cb9.png

La-Z-Boy

Monroe, Michigan-based La-Z-Boy manufactures, retails and distributes upholstery furniture products. GuruFocus ranks La-Z-Boy's financial strength and profitability 7 out of 10 on several positive investing signs, which include robust interest coverage, expanding operating margins and a three-year revenue growth rate that outperforms 64.33% of global competitors.

a61d0ad8842c1ab7154e884855654db8.png
a61d0ad8842c1ab7154e884855654db8.png

Mohawk

Calhoun, Georgia-based Mohawk manufactures a wide range of flooring products, including carpets, rugs, ceramic tile, laminate, wood and vinyl flooring. GuruFocus ranks Mohawk's profitability 8 out of 10, driven by a 3.5-star predictability rank and profit margins that outperform over 65% of global competitors.

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dedb409ba1604a974ec1849c6d40756a.png

Disclosure: No positions.

  • 5 Predictable Stocks With Historical Low Price-Sales Ratios

  • 5 Undervalued Predictable Companies for Summer 2020

  • Top-Performing Nasdaq Stocks So Far in 2020



Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.

This article first appeared on GuruFocus.


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