Sidoti Rated HNI Corporation as ‘Neutral’

HNI Corporation (HNI) has a market cap of $2.3 billion and fell 2.1% to close at $51.99 per share on January 6, 2017. The stock’s weekly, monthly, and YTD (year-to-date) price movements were -7.4%, -3.2%, and -7.0%, respectively, on the same day.

HNI is now trading 5.7% below its 20-day moving average, 3.2% above its 50-day moving average, and 11.2% above its 200-day moving average.

The Vanguard Small-Cap ETF (VB) invests 0.08% of its holdings in HNI. The YTD price movement of VB was 1.3% on January 6.

The market caps of HNI’s competitors are as follows:

• Steelcase (SCS): $2.0 billion
• Herman Miller (MLHR): $2.0 billion
• Knoll (KNL): $1.4 billion

On January 6, 2017, Sidoti initiated its coverage of HNI Corporation with “neutral” rating and also set the stock’s price target at $59.0 per share.

HNI reported 3Q16 net sales of $584.6 million—a fall of 5.1%, as compared to its net sales of $615.9 million in 3Q15. The net sales of its Office Furniture and Hearth Products segments fell 4.4% and 7.3%, respectively, in 3Q16 from 3Q15 levels. The company’s gross profit margin expanded 30 basis points, and its operating margin narrowed 110 basis points in 3Q16 as compared to 3Q15.

HNI’s net income and EPS (earnings per share) fell to $33.8 million and $0.74, respectively, in 3Q16, as compared to $40.8 million and $0.90, respectively, in 3Q15. It reported adjusted EPS of $0.80 in 3Q16—a fall of 14.0% from 3Q15.

HNI’s cash and cash equivalents fell 4.2%, and its inventories rose 20.4%, respectively, between 3Q16 and 4Q15.

HNI expects its sales to fall 1%–4% in 4Q16. It expects its non-GAAP (generally accepted accounting principles) EPS to be in the range of $2.60–$2.70 in 2016.

The company has made the following projections for 2017:

• sales of -2%–2%
• non-GAAP EPS of $2.75–$3.15

Next, we’ll look at Mohawk Industries (MHK).