Stock Analysis

If You Had Bought Hooker Furniture (NASDAQ:HOFT) Shares A Year Ago You'd Have Earned 116% Returns

  •  Updated
NasdaqGS:HOFT
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Unfortunately, investing is risky - companies can and do go bankrupt. But if you pick the right business to buy shares in, you can make more than you can lose. Take, for example Hooker Furniture Corporation (NASDAQ:HOFT). Its share price is already up an impressive 116% in the last twelve months. On top of that, the share price is up 13% in about a quarter. On the other hand, longer term shareholders have had a tougher run, with the stock falling 10% in three years.

View our latest analysis for Hooker Furniture

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the last year Hooker Furniture saw its earnings per share (EPS) drop below zero. While some may see this as temporary, we're a skeptical bunch, and so we're a little surprised to see the share price go up. It may be that the company has done well on other metrics.

Unfortunately Hooker Furniture's fell 15% over twelve months. So the fundamental metrics don't provide an obvious explanation for the share price gain.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

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NasdaqGS:HOFT Earnings and Revenue Growth March 8th 2021

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. You can see what analysts are predicting for Hooker Furniture in this interactive graph of future profit estimates.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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 Hooker Furniture, it has a TSR of 123% 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 good to see that Hooker Furniture has rewarded shareholders with a total shareholder return of 123% in the last twelve months. That's including the dividend. That's better than the annualised return of 4% 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. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Hooker Furniture you should know about.

If you are like me, then you will not want to miss this free list of growing companies that insiders are 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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