The tough times continue for recent Income Investor selection Tuesday Morning
A quick look at the numbers shows fourth-quarter earnings of $23.8 million, or $0.57 per diluted share, down from the year-ago $35.6 million, or $0.85 per diluted share. Unfortunately, the full-year results were just as dismal. Net income totaled a meager $36.4 million, or $0.87 per share. That's quite a drop from the $61 million, or $1.46 per share, it earned in 2005. And as Rick Munarriz predicted, comparable-store sales fell 9.8% in the quarter and 7.9% for the full year.
Obviously, none of this bodes well for the retail closeout specialist. The poor results seem to stem from continued weakness in the store's primary business segment, home furnishings. The perils of this specialty market have been well-documented in the struggles of some of Tuesday Morning's competitors, primarily Pier 1 Imports
The good news ... Ah, yes, there are a couple of positives. The company continues to maintain a healthy cash balance with no debt. It also pays out a nice dividend, currently yielding roughly 5%. And after the beating it's endured over the past year -- down about 28% -- the company could also be viewed as a value play.
Unfortunately, there's no clear-cut answer on how Tuesday Morning's situation will play out. If you believe its slide will continue or worsen, there's no sense in buying, even at these levels. After all, junk at bargain prices is still junk. If, however, you think its recent performance and predicted flat 2007 have been sufficiently factored into the price of its stock, now might be a good time to get in at a discounted price. Even if it takes a bit of time to recover, you still have the benefit of dividend payments.
For more on the home furnishings retailers, check out:
Tuesday Morning is a Motley Fool Income Investor recommendation. To find out why and to see other great income-producing ideas, click here for your 30-day trial.
Fool contributor Mike Cianciolo welcomes feedback and doesn't own any of the companies mentioned in this article.