Sometimes, there's just not that much to say. That's true today when you look at the earnings from Stanley Furniture (Nasdaq: STLY ) . This Motley Fool Hidden Gems recommendation's shares have taken a beating over the past few weeks, and they look a lot more volatile than you'd expect from a sleepy furniture outfit.
Revenues for Q2 came in 7.4% lighter than last year, while earnings took a much bigger dive. Net profits were down 32%, while earnings dropped 27% on a per-share basis. That's owed to a 7.5% reduction in the number of diluted shares outstanding.
If you'd like a little more in your half-full side of the glass, you might take a look at cash flows. Often, revenue-induced drops in earnings are accompanied by ugliness on the cash flow sheet as well, but that's not the case here. Stanley managed to put up a 9% better tally for cash flow so far this year, partially because of reduced capital expenditures (so far) and partially because working capital management seems to be keeping the firm lean, if not mean.
You might even be forgiven for thinking the shares look a little bit cheap -- measured by historical average multiples as well as a fairly pessimistic cash-flow valuation. No, I haven't been huffing bus exhaust. It's just that right now, the market seems to hate everything that's related to the housing market.
Don't get me wrong -- I think we've got some real-estate bubbles that will be popping. But I also think the fallout for Stanley and peers like Ethan Allen (NYSE: ETH ) , Hooker Furniture (Nasdaq: HOFT ) , and La-Z-Boy (NYSE: LZB ) need not be as calamitous as some imagine -- just as I think Home Depot (NYSE: HD ) shares have also been unduly discounted these days.
While I believe that restructuring and efficiency are no substitute for real revenue-driven growth, a company that can handle a downturn like this with its balance sheet intact and its processes improved can be positioned for quite a bit of outperformance should the economy not turn out to be going to heck in a handbasket. Stanley management has also increased its funds available for stock buybacks to $50 million. I have to say that given the stock's price today, in a couple years it might look like money well spent.
Stanley and Hooker are both recommendations ofMotley Fool Hidden Gems. Afree trialwill get you access to all issues, so you can see the original write-ups as well as what the community thinks of the latest news.
At the time of publication, Seth Jayson had shares of Home Depot, but no position in any other company mentioned. La-Z-Boy is an Income Investor recommendation. Home Depot is an Inside Value recommendation. View his stock holdings and Fool profilehere. Fool rules arehere.