Stock Analysis

If You Had Bought Flexsteel Industries (NASDAQ:FLXS) Stock A Year Ago, You Could Pocket A 104% Gain Today

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NasdaqGS:FLXS
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Flexsteel Industries, Inc. (NASDAQ:FLXS) shareholders might be concerned after seeing the share price drop 11% in the last week. On the other hand, over the last twelve months the stock has delivered rather impressive returns. We're very pleased to report the share price shot up 104% in that time. So it may be that the share price is simply cooling off after a strong rise. Only time will tell if there is still too much optimism currently reflected in the share price.

View our latest analysis for Flexsteel Industries

Because Flexsteel Industries made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Flexsteel Industries actually shrunk its revenue over the last year, with a reduction of 6.5%. We're a little surprised to see the share price pop 104% in the last year. This is a good example of how buyers can push up prices even before the fundamental metrics show much growth. It's quite likely the revenue fall was already priced in, anyway.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
NasdaqGS:FLXS Earnings and Revenue Growth February 2nd 2021

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Flexsteel Industries, it has a TSR of 110% for the last year. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's nice to see that Flexsteel Industries shareholders have received a total shareholder return of 110% over the last year. That's including the dividend. Notably the five-year annualised TSR loss of 0.5% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should learn about the 2 warning signs we've spotted with Flexsteel Industries (including 1 which is concerning) .

Flexsteel Industries is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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What are the risks and opportunities for Flexsteel Industries?

Flexsteel Industries, Inc., together with its subsidiaries, operates as a manufacturer, importer, and online marketer of upholstered furniture for residential and contract markets in the United States.

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Rewards

  • Trading at 59.3% below our estimate of its fair value

  • Earnings are forecast to grow 124.4% per year

Risks

  • Does not have a meaningful market cap ($99M)

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1Y Return

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Flexsteel Industries

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