Shares of Hooker Furniture (HOFT), a home furnishings marketing, design, and logistics company, were up about 7 percent in early trading. Investors seem to be ignoring the cautionary part of management commentary on the company’s fiscal Q1 2016 outlook, choosing instead to focus on the company’s long term position, overall bullish commentary and analyst estimates that call for EPS to increase to $1.24 in fiscal 2016. We are still maintaining our $24 price target, but believe the stock still has a chance to trade a P/E of 25 on new trailing EPS of $1.16, or $29.00.

Hooker Furniture Bullish Management Commentary

Management commentary on the business outlook was bullish with a cautionary note (partially due to seasonality) on the next quarter:

“Our business was hitting on all cylinders across all product lines, types of retailers and geographic regions in the fourth quarter,” said Toms. “However, business slowed somewhat in the first two months of our fiscal first quarter, which is typical.

“We have experienced increased ocean freight rates since late July and expect some margin deterioration in our first quarter results. However, we expect to mitigate these increases by our second fiscal quarter.”

In our 1/2/2015 email we stated:

“The stock chart is strong, shares are approaching a new 52 week high ($17.40), we will look to add to our long position.”

“In our 12/19/2014 call to action we stated we were going long HOFT when the stock was trading at $16.60. Our initial short term price target was $19.35 based on trailing twelve EPS at that time. However, we believe there is upside opportunity as shares could trade at a P/E of 25 on trailing EPS of $0.96 or $24.00 per share.”

Today, Hooker Furniture reported strong fiscal 2015 results for the year that ended in January:

  • Sales increased 12.7% to $64.9 million ahead of analyst estimates of $61.6 million
  • EPS rose to $0.40 vs $0.19 in the prior year and ahead of analyst estimates of $0.28

GeoInvesting added to its long position in Hooker Furniture in early morning trading.


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