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Bear of the Day

Haverty Furniture Companies, Inc. (HVT - Snapshot Report) recently had a second so-so quarter in a row. Analysts cut estimates again on this Zacks Rank #5 (Strong Sell).

Havertys has seen it all. The company was founded in 1885 in Atlanta and used to make deliveries in horse and buggy. It now has showrooms in 16 Southern and Midwest states. Havertys went public in 1929 during dark economic times, but it has survived each of the big economic shocks.

The impact of the recent housing bust is obvious in Havertys multi-year earnings history. Earnings plunged 88.7% in 2007 to just 8 cents before the rest of the country went into recession and took Havertys even lower.

The company didn't make money in either 2008 or 2009. Even 2010 and 2011 were still a struggle. But in 2012, the turnaround in the housing market, and the consumer, began to take hold. Havertys made 67 cents that year and it had seen rising earnings estimates until this year.

First Earnings Miss Since 2012

On July 30, Havertys reported its second quarter results and missed the Zacks Consensus by a penny. Earnings were $0.21 compared to the consensus of $0.22.

Even though it was just a penny, it was still the first earnings miss for the company since 2012.

Unlike the first quarter, when sales got hammered by polar vortexes, there was no such excuse this time. Comparable store sales rose 3.2% but were up against tough double digit comps in 2013, when the furniture industry was hot due to the housing market catching a bid. The quarter showed growth in upholstery, mattresses and accessories, however.

Still, the company described "repositioning" in key markets in the second half of the year. It is opening 3 store relocations, 3 new stores, including one new urban format, and one store closure.

It is also jazzing up its website which it said would feature additional shopping tools. Online furniture sales are growing quickly industrywide.

Estimates Cut for 2014 and 2015

The analysts didn't think there was much to like in the earnings report even though Havertys gave a third quarter sales update of comparable store sales growth of 3.3%.

Even though Havertys had only missed by a penny, analysts cut 2014 by 6 cents to $1.28. That is an earnings decline of 9.2% compared to 2013 and a step back in the company's earnings recovery coming out of the recession.

You can really see the slowdown in the housing market in these numbers.

3 estimates were also cut for 2015 with the Zacks Consensus falling to $1.51 from $1.61 over the last 30 days.

Shares Slide

Havertys shares had soared once it was posting solid earnings and revenue gains. But in 2014, shares have tumbled the other way and are trading near a 52-week low.

But are they cheap?

Shares still trade with a forward P/E of 17.9, which is above the average of the S&P 500 of 16.4. It does have a low price-to-book ratio of just 1.7, however, and its price-to-sales ratio is just 0.7.

A P/S ratio under 1.0 can mean a company is undervalued.

But given the "repositioning" and the still slow housing market, it looks like the rest of 2014 could be tough.

If you're still interested in investing in a furniture company this year, you might want to consider Williams Sonoma Inc. (WSM - Analyst Report). Its West Elm brand is one of the hottest in the furniture industry and it's expected to see double digit earnings growth this year. Williams Sonoma is a Zacks Rank #2 (Buy).

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Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.

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