Is It Too Late To Consider Buying Haverty Furniture Companies, Inc. (NYSE:HVT)?

Haverty Furniture Companies, Inc. (NYSE:HVT), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the NYSE. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Today I will analyse the most recent data on Haverty Furniture Companies’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Haverty Furniture Companies

Is Haverty Furniture Companies Still Cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 6.5% below my intrinsic value, which means if you buy Haverty Furniture Companies today, you’d be paying a fair price for it. And if you believe the company’s true value is $33.98, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Haverty Furniture Companies’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from Haverty Furniture Companies?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Haverty Furniture Companies, it is expected to deliver a negative revenue growth of -3.5% next year, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? Currently, HVT appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on HVT for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on HVT should the price fluctuate below its true value.

So while earnings quality is important, it's equally important to consider the risks facing Haverty Furniture Companies at this point in time. For example, we've found that Haverty Furniture Companies has 2 warning signs (1 makes us a bit uncomfortable!) that deserve your attention before going any further with your analysis.

If you are no longer interested in Haverty Furniture Companies, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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