Harvey Norman Holdings (ASX:HVN) - Share price, News & Analysis

Q: What is the Fair Price of HVN when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

HVN (A$4.32) is trading below our estimate of [[fair value]] (A$8.98)

HVN fundamental analysis
Snowflake Score
Valuation	5/6
Future Growth	0/6
Past Performance	4/6
Financial Health	6/6
Dividends	5/6

HVN Stock Overview

Harvey Norman Holdings Limited engages in the integrated retail, franchise, property, and digital system businesses.

Rewards

Trading at 51.9% below our estimate of its fair value

Earnings grew by 11.2% over the past year

Risk Analysis

Earnings are forecast to decline by an average of 10.1% per year for the next 3 years

Unstable dividend track record

Harvey Norman Holdings Competitors

Wesfarmers

ASX:WES

AU$53.0b

Reject Shop

ASX:TRS

AU$165.6m

JB Hi-Fi

ASX:JBH

AU$4.8b

Premier Investments

ASX:PMV

AU$3.3b

Price History & Performance

Summary of all time highs, changes and price drops for Harvey Norman Holdings
Historical stock prices
Current Share Price	AU$4.32
52 Week High	AU$5.91
52 Week Low	AU$3.53
Beta	0.80
1 Month Change	9.37%
3 Month Change	-4.64%
1 Year Change	-23.40%
3 Year Change	-4.85%
5 Year Change	0%
Change since IPO	2,534.15%

Recent News & Updates

Jun 23

These 4 Measures Indicate That Harvey Norman Holdings (ASX:HVN) Is Using Debt Reasonably Well

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it might be obvious that you need to...

May 21

Harvey Norman Holdings (ASX:HVN) Hasn't Managed To Accelerate Its Returns

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. One common...

Apr 09

If You Like EPS Growth Then Check Out Harvey Norman Holdings (ASX:HVN) Before It's Too Late

It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks...

Mar 28

Is Harvey Norman Holdings Limited (ASX:HVN) Trading At A 30% Discount?

Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Harvey Norman Holdings...

Shareholder Returns

	HVN	AU Multiline Retail	AU Market
7D	2.1%	-1.3%	0.7%
1Y	-23.4%	-26.0%	-8.0%

Return vs Industry: HVN exceeded the Australian Multiline Retail industry which returned -26% over the past year.

Return vs Market: HVN underperformed the Australian Market which returned -8% over the past year.

Price Volatility

Is HVN's price volatile compared to industry and market?
HVN volatility
HVN Average Weekly Movement	4.7%
Multiline Retail Industry Average Movement	4.7%
Market Average Movement	10.5%
10% most volatile stocks in AU Market	17.6%
10% least volatile stocks in AU Market	4.6%

Stable Share Price: HVN is less volatile than 75% of Australian stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: HVN's weekly volatility (5%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1982	6,183	Katie Page	https://www.harveynormanholdings.com.au

Harvey Norman Holdings Limited engages in the integrated retail, franchise, property, and digital system businesses. Its franchises and sells products in various categories, including electrical goods, furniture, computerized communications, bedding and Manchester, kitchen and small appliances, bathroom and tiles, and carpets and floorings. The company operates 192 franchised complexes under the Harvey Norman, Domayne, and Joyce Mayne brands in Australia; and 107 company-operated stores under the Harvey Norman brand in New Zealand, Singapore, Malaysia, Slovenia, Croatia, Ireland, and Northern Ireland.

Harvey Norman Holdings Fundamentals Summary

How do Harvey Norman Holdings's earnings and revenue compare to its market cap?
HVN fundamental statistics
Market Cap	AU$5.36b
Earnings (TTM)	AU$810.30m
Revenue (TTM)	AU$2.77b

6.6x

P/E Ratio

1.9x

P/S Ratio

Is HVN overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
HVN income statement (TTM)
Revenue	AU$2.77b
Cost of Revenue	AU$1.85b
Gross Profit	AU$923.23m
Other Expenses	AU$112.94m
Earnings	AU$810.30m

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

Aug 31, 2022

Earnings per share (EPS)	0.65
Gross Margin	33.34%
Net Profit Margin	29.26%
Debt/Equity Ratio	11.4%

How did HVN perform over the long term?

See historical performance and comparison

Dividends

8.1%

Current Dividend Yield

54%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is HVN undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for HVN?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for HVN. This is calculated by dividing HVN's market cap by their current preferred multiple.
What is HVN's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	AU$5.36b

HVN key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	2.4x
Enterprise Value/EBITDA	6.1x
PEG Ratio	-0.7x

Price to Earnings Ratio vs Peers

How does HVN's PE Ratio compare to its peers?

HVN PE Ratio vs Peers

The above table shows the PE ratio for HVN vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	18.1x
WES Wesfarmers	24.5x	7.6%	AU$53.0b
TRS Reject Shop	26x	44.5%	AU$165.6m
JBH JB Hi-Fi	10.2x	-9.4%	AU$4.8b
PMV Premier Investments	13.7x	1.3%	AU$3.3b
HVN Harvey Norman Holdings	6.6x	-10.1%	AU$5.4b

Price-To-Earnings vs Peers: HVN is good value based on its Price-To-Earnings Ratio (6.6x) compared to the peer average (18.1x).

Price to Earnings Ratio vs Industry

How does HVN's PE Ratio compare vs other companies in the Global Multiline Retail Industry?

Price-To-Earnings vs Industry: HVN is good value based on its Price-To-Earnings Ratio (6.6x) compared to the Global Multiline Retail industry average (16.2x)

Price to Earnings Ratio vs Fair Ratio

What is HVN's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

HVN PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	6.6x
Fair PE Ratio	12x

Price-To-Earnings vs Fair Ratio: HVN is good value based on its Price-To-Earnings Ratio (6.6x) compared to the estimated Fair Price-To-Earnings Ratio (12x).

Share Price vs Fair Value

What is the Fair Price of HVN when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: HVN (A$4.32) is trading below our estimate of fair value (A$8.98)

Significantly Below Fair Value: HVN is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.

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Future Growth

How is Harvey Norman Holdings forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

-10.1%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: HVN's earnings are forecast to decline over the next 3 years (-10.1% per year).

Earnings vs Market: HVN's earnings are forecast to decline over the next 3 years (-10.1% per year).

High Growth Earnings: HVN's earnings are forecast to decline over the next 3 years.

Revenue vs Market: HVN's revenue (5.1% per year) is forecast to grow slower than the Australian market (5.6% per year).

High Growth Revenue: HVN's revenue (5.1% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: HVN's Return on Equity is forecast to be low in 3 years time (10.7%).

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Past Performance

How has Harvey Norman Holdings performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

17.0%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: HVN has high quality earnings.

Growing Profit Margin: HVN's current net profit margins (29.3%) are higher than last year (28.8%).

Past Earnings Growth Analysis

Earnings Trend: HVN's earnings have grown by 17% per year over the past 5 years.

Accelerating Growth: HVN's earnings growth over the past year (11.2%) is below its 5-year average (17% per year).

Earnings vs Industry: HVN earnings growth over the past year (11.2%) exceeded the Multiline Retail industry -3.9%.

Return on Equity

High ROE: HVN's Return on Equity (19.6%) is considered low.

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Financial Health

How is Harvey Norman Holdings's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: HVN's short term assets (A$1.9B) exceed its short term liabilities (A$1.1B).

Long Term Liabilities: HVN's short term assets (A$1.9B) exceed its long term liabilities (A$1.7B).

Debt to Equity History and Analysis

Debt Level: HVN's net debt to equity ratio (0.5%) is considered satisfactory.

Reducing Debt: HVN's debt to equity ratio has reduced from 21.9% to 11.4% over the past 5 years.

Debt Coverage: HVN's debt is well covered by operating cash flow (151.6%).

Interest Coverage: HVN's interest payments on its debt are well covered by EBIT (47.1x coverage).

Balance Sheet

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Dividend

What is Harvey Norman Holdings's current dividend yield, its reliability and sustainability?

Dividend Score

5/6

Dividend Score 5/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

8.10%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: HVN's dividend (8.1%) is higher than the bottom 25% of dividend payers in the Australian market (2.65%).

High Dividend: HVN's dividend (8.1%) is in the top 25% of dividend payers in the Australian market (6.3%)

Stability and Growth of Payments

Stable Dividend: HVN's dividend payments have been volatile in the past 10 years.

Growing Dividend: HVN's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonable payout ratio (53.8%), HVN's dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonable cash payout ratio (68.6%), HVN's dividend payments are covered by cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

12.5yrs

Average management tenure

CEO

Katie Page (65 yo)

23.5yrs

Tenure

AU$3,863,116

Compensation

Ms. Kay Lesley Harvey Page, also known as Katie, has been the Chief Executive Officer of Harvey Norman Holdings Limited since February 1999 and has overall executive responsibility for the operations of th...

CEO Compensation Analysis

Compensation vs Market: Katie's total compensation ($USD2.70M) is above average for companies of similar size in the Australian market ($USD1.99M).

Compensation vs Earnings: Katie's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: HVN's management team is seasoned and experienced (12.5 years average tenure).

Board Members

Experienced Board: HVN's board of directors are seasoned and experienced ( 20.3 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/08/09 00:00
End of Day Share Price	2022/08/09 00:00
Earnings	2021/12/31
Annual Earnings	2021/06/30