Stock Analysis

Hooker Furniture's (NASDAQ:HOFT) Stock Price Has Reduced 38% In The Past Three Years

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NasdaqGS:HOFT
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It is doubtless a positive to see that the Hooker Furniture Corporation (NASDAQ:HOFT) share price has gained some 34% in the last three months. But that doesn't help the fact that the three year return is less impressive. Truth be told the share price declined 38% in three years and that return, Dear Reader, falls short of what you could have got from passive investing with an index fund.

Check out our latest analysis for Hooker Furniture

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Hooker Furniture saw its share price decline over the three years in which its EPS also dropped, falling to a loss. Extraordinary items contributed to this situation. Since the company has fallen to a loss making position, it's hard to compare the change in EPS with the share price change. However, we can say we'd expect to see a falling share price in this scenario.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

earnings-per-share-growth
NasdaqGS:HOFT Earnings Per Share Growth November 22nd 2020

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. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Hooker Furniture, it has a TSR of -33% for the last 3 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's good to see that Hooker Furniture has rewarded shareholders with a total shareholder return of 31% in the last twelve months. Of course, that includes the dividend. That's better than the annualised return of 3% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Hooker Furniture better, we need to consider many other factors. For instance, we've identified 2 warning signs for Hooker Furniture that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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 Hooker Furnishings?

Hooker Furnishings Corporation designs, manufactures, imports, and markets residential household, hospitality, and contract furniture.

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Rewards

  • Trading at 50.8% below our estimate of its fair value

  • Earnings are forecast to grow 26.96% per year

Risks

  • Profit margins (1.6%) are lower than last year (3.9%)

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Hooker Furnishings

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