Last month, Fool co-founder and Motley Fool Hidden Gems lead analyst Tom Gardner regaled Hidden Gems members with his twice-yearly comprehensive review and ranking of the newsletter's formal recommendations, his Top 10 Watch List suggestions and Tiny Gems highlights. Among the companies covered: our twin furniture maker recommendations, Stanley Furniture
Because Hidden Gems is an exclusive service, I'm not at liberty to say which of the two companies -- Stanley or Hooker -- is Tom's favorite investment. Suffice it to say that I think he was right on track in his analysis of Hooker, though, and that to judge from that company's earnings report released last month, Hooker continues to underperform Stanley as a business.
Three months ago, we watched once more as Stanley proved its superiority over Hooker. (Again, this is as a business. I'm keeping mum on which stock represents the better value.) On Monday, we'll check back in on Stanley as it reports its Q3 2005 earnings and see how well the company is maintaining its lead in the troubled furniture-manufacturing sector.
As for what, precisely, we'll be looking for next week, let's begin with what Stanley itself told us to expect, back in July:
- "Net sales are expected to be in the range of $82.5 million to $85.5 million, an increase of 5% to 9% over the third quarter of 2004.
- "Operating income is expected to be in the range of $9.3 million to $10 million.
- "Earnings per share are expected to be in the range of $0.44 to $0.47, compared with record earnings of $0.40 per share in the year-ago quarter."
The consensus of the six analysts currently following Stanley is more optimistic still. On average, the Street is looking to see Q3 revenues come in around $85.74 million, with $0.47 per diluted share dropping to the bottom line. In other words, analysts expect to be surprised, and pleasantly so. Should Stanley somehow fail to beat its own revenue estimates and fail to hit the very tippety-top of its earnings hopes, its stock could be in for a fall.
Unfair? Sure is. But it seems that's the price that must be paid when your company has beaten analyst expectations in each of the past four quarters.
Admit it. You're dying to know which company Tom thinks will outperform not just the S&P 500 (with Hidden Gems picks currently maintaining a 4-to-1 lead over the rest of the market, that's pretty much a given). You want to know which stock will outperform the S&P by the biggest margin.
Well, rejoice, dear Fool. You can sign up for a free trial to Hidden Gems. That will give you full access to Tom's biannual review of all 50-odd of our picks, Stanley and Hooker included. Read all you want. Stay if you like. Quit if you don't. It's as simple as that.
Fool contributor Rich Smith owns shares of Hooker Furniture and several other Hidden Gems picks, but not of Stanley.The Fool has a strict disclosure policy.
