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Is Hooker Furniture Corporation (NASDAQ:HOFT) A Consumer Industry Laggard Or Leader?

Ben Rossbaum

Hooker Furniture Corporation (NASDAQ:HOFT), a US$543.72m small-cap, operates in the consumer discretionary industry, whose sales are driven primarily by consumer sentiment and access to capital. These macro factors tend to determine the rate at which consumers purchase big-ticket durable items. Consumer discretionary analysts are forecasting for the entire industry, a positive double-digit growth of 17.85% in the upcoming year , and a whopping growth of 35.92% over the next couple of years. the growth rate of the US stock market as a whole. Below, I will examine the sector growth prospects, and also determine whether Hooker Furniture is a laggard or leader relative to its consumer discretionary sector peers.

View our latest analysis for Hooker Furniture

What’s the catalyst for Hooker Furniture’s sector growth?

NasdaqGS:HOFT Past Future Earnings August 17th 18

E-retailing is expected to remain the fastest growing sales channel, shifting the retail landscape. Over the past year, the industry saw growth in the teens, though still underperforming the wider US stock market. Hooker Furniture is neither a lagger nor a leader, and has been growing in-line with its industry peers at around 11.53% in the prior year. However, analysts are expecting the company to accelerate ahead of its peers over the next year, and deliver a 36.02% growth next year. This growth may make Hooker Furniture a more expensive stock relative to its peers.

Is Hooker Furniture and the sector relatively cheap?

NasdaqGS:HOFT PE PEG Gauge August 17th 18

The household durables sector’s PE is currently hovering around 13.48x, in-line with the US stock market PE of 18.08x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. However, the industry returned a higher 13.62% compared to the market’s 11.40%, potentially illustrative of past tailwinds. On the stock-level, Hooker Furniture is trading at a PE ratio of 17.79x, which is relatively in-line with the average big-ticket durable items. stock. In terms of returns, Hooker Furniture generated 13.03% in the past year, in-line with its industry average.

Next Steps:

Hooker Furniture’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. However, this high growth prospect is most likely factored into the share price, given the stock is trading in-line with its peers. If Hooker Furniture has been on your watchlist for a while, now may be the time to enter into the stock. If you like its growth prospects, you’ll be paying a fair value for the company. However, if you’re hoping to gain from an undervalued mispricing, this is probably not the best time. However, before you make a decision on the stock, I suggest you look at Hooker Furniture’s fundamentals in order to build a holistic investment thesis.

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Historical Track Record: What has HOFT’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Hooker Furniture? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.