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Bear Of The Day: Bassett Furniture (BSET)

Brian Bolan

Bassett Furniture (BSET) is a Zacks Rank #5 (Strong Sell) and today it is the Bear of the Day.  The problem is, I like this stock and I think there is a good future here are the homebuilders are starting to look better and better.  When people buy new homes, they also buy new furniture, so there could be some good times ahead.

Description

Bassett Furniture Industries, Inc. is a leading manufacturer and marketer of high quality, mid-priced home furnishings. With over one hundred and thirty Bassett Furniture Direct stores, Bassett has leveraged its brand name in furniture with a network of licensed and Company-owned stores that focus on providing consumers with a friendly and professional environment for buying furniture and accessories. The Company continues to sell its products to other retailers, in addition to the Company's dedicated retail store program. Bassett's retail strategy promotes affordable custom-built furniture that is ready for delivery in the home within thirty days. The stores also feature the latest on-trend furniture styles, more than one thousand upholstery fabrics, free in-home design visits, and coordinated decorating accessories.

Earnings History

I see a fair earnings history, with two beat and two misses over the last four reports.  The problem is that the misses are bigger than the beats, so that trend must stop as soon as possible.

Estimate Revisions

As a Zacks Rank #5 (Strong Sell) I know the estimates are moving lower, the question is how much lower.

Following the most recent beat, numbers came down and did so by quite a bit.  The current fiscal year estimate has moved from $1.34 down to $0.76 over the last 90 days.

That sort of move is the basis of the Zacks Rank falling to the lowest level for this stock.

Valuation

I see a 23x forward earnings multiple, which is a little rich for a stock that is seeing only 10% annual top line growth.  The price to book at 1x is very cheap and should keep the value players on the name.  The price to sales multiple of 0.4x tells me that the market doesn't value their products that highly or they would trade at a multiple of more than 1x.

Chart

 

Bassett Furniture Industries, Incorporated Price and Consensus

Bassett Furniture Industries, Incorporated Price and Consensus | Bassett Furniture Industries, Incorporated Quote

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