Investing

Havertys Declares Special Dividend After Stunning Rally

Havertys Furniture Companies (US:HVT) ended this week by telling investors that its board of directors had authorized a special dividend to be paid in December with the usual ordinary quarterly payment.

In addition to Havertys ordinary 28 cent quarterly dividend, the company will pay $1 per common share and 95 cents per Class A share to investors on the 13th of December.

The record date for investors to be entitled to the dividend will be on the 28th of November.

HVT has historically paid a special dividend to investors of excess free cash flows over the past two years during the final quarter of the year. The dividend rate over 2020 and 2021 was $2 per share.

While the special dividend rate has fallen this year, the firm’s ordinary dividend rate has risen during this period from 20 cents to 28 cents representing almost 50% growth.

The news follows HVT’s spectacular share price rally over November which has pushed the stock up more than 20% as investors rushed back to the stock following a bullish third quarter result.

Havertys grew sales in the third quarter by 5.6% to $274.5 million when compared to Q3 in 2021.

Gross profits expanded by -5.9% to $156.7 million from $148 million in the prior year.

At the bottom line, net profits marginally increased by 1.3% to $24.55 million from $24.23 million in 2021.

The excess gross profits were eaten away by growth in selling, general and administrative (SG&A) expenses as well as interest expenses growing to almost half a million from around $50k in the prior year.

Looking ahead at the upcoming quarter of fiscal 2022, HVT’s Chairman and CEO Clarence Smith expects customers to continue to feel the brunt of continued inflation and rising rates but believes the firm remains well positioned to service the growing customer base.

For the full year, HVT expects profit margins to come in between 57.7-58.0% when incorporating anticipated changes in product and freight costs and how it will impact the businesses reserves.

The firm also reduced full year SG&A expense guidance to $290-293 million from $293-295 million previously. Capex guidance was also cut to around $30 million from $32 million guided previously.

A chart at Fintel’s financial metrics and ratios page for HVT shows the rolling level of sales and profitability over time for the stock.

Analyst Anthony Lebiedzinski from Sidoti & Co believes the third quarter result topped expectations as supply chains improved. The firm expects to see continued strong free cash flow generation that should support ‘shareholder-friendly’ policies and therefore remains ‘buy’ rated on the stock with their upbeat $44 price target.

Following the strong post result share price rally, HVT now has a positive year to date share price gain of almost 6%, even after paying dividends to investors. This is well ahead of the broader market which remains down year to date.

The stock is supported on valuation grounds with an undemanding PE ratio of 6.3x. Fintel’s value score of 94.42 ranks the stock highly when screened against global securities.

Fintel’s quant platform has also identified that HVT may be a candidate for a short squeeze, if buying sentiment were to spike higher.

Fintel’s short squeeze score of 87.36 is bullish on the prospects that an event could occur. The score ranks CTRN in the top 3% of 5,116 screened companies.

The score is based on the stock having 21.49% of its float currently shorted, according to Nasdaq data with 24.79 days to cover.

This article originally appeared on Fintel

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