With its conversion to a new fiscal calendar complete, and its fiscal year 2007 cut abruptly short, Hooker Furniture
What analysts say:
- Buy, sell, or waffle? Two analysts follow Hooker. One says buy. The other says hold. The Motley Fool CAPS community disagrees with both analysts, giving the company just a one-star rating (out of five).
- Revenue. The shift in Hooker's financial calendar makes year-over-year comparisons difficult. That said, the analysts predict $85.6 million in sales in this year's Q2.
- Earnings. On average, they're predicting $0.35 per share in profits.
What management says:
Last quarter, we covered how Hooker was punished after it released earnings that dropped by the double digits. But we didn't really touch on what management was expecting to come for the rest of 2008. So let's go over that now.
CEO Paul Toms predicted that "sluggish retail conditions" will "continue at least through the summer months." Regardless, Toms promised "improved profitability and margin performance as the year progresses ... due to our implementation of cost-cutting measures and our continued progress in managing our supply chain, warehousing, and distribution operations."
If you read between the lines, Toms has actually hedged his bets pretty well. If things go perfectly for Hooker in Thursday's news, then he can boast of having fulfilled his promises. On the other hand, if problems cropped up over the last quarter, and Hooker disappoints investors as a result, Toms can point out that he didn't really promise to improve profitability in Q2 per se -- just "as the year progresses." That will leave plenty of wiggle room to promise better days ahead in the second fiscal half.
What management does:
Hooker's switching of its fiscal calendar has thrown the Fool's data provider for a loop, so it's hard to prepare trailing-12-month numbers. As a result, what we're showing you below is not the usual tally of "rolling" results, but just the quarter-by-quarter numbers -- which still suffice to show us recent trends.
For context, Hooker seems to be pulling down gross and operating margins that exceed those of rivals like Stanley
|
11/05 |
2/06 |
5/06 |
8/06 |
11/06 |
4/07 |
|
|---|---|---|---|---|---|---|
|
Gross |
28.3% |
26.9% |
29.6% |
28.3% |
30.7% |
28.6% |
|
Operating |
4.8% |
7.0% |
11.4% |
6.8% |
8.0% |
7.9% |
|
Net |
4.5% |
4.2% |
6.4% |
1.5% |
3.9% |
5.5% |
One Fool says:
Year-ago comparisons of the firm's performance in other respects are similarly dicey. Generally speaking, though, Hooker appears to be suffering from flat to declining sales. The good news, however, is that accounts receivable are also heading downward, and as promised, inventories are on a downward trend to meet current sales trends.
As a result, Hooker generated considerably more free cash flow in the last quarter -- which ended in April -- than it did in the almost-but-not-quite-equivalent quarter ending in May last year. As of the end of fiscal Q1 2008, Hooker had nearly $19 million in cash profits under its belt. One year previously, at about the same time of the calendar year, negative free cash flow stood at about $13 million.
Long story short, while it's difficult to say precisely how much Hooker has improved over the past year, I think the company may be heading in the right direction.
What did we expect from Hooker last quarter, and what did we get?
- Analysts predicted a new and improved Hooker ...
- ... but the numbers looked tarnished ...
- ... and the stock was punished for its poor performance.
Stanley is a Motley Fool Hidden Gems pick. See what other companies make up the small-cap newsletter's portfolio with a free 30-day trial.
Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.
