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Bear of the Day: Bassett Furniture (BSET)

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Bassett Furniture Industries, Inc. (BSET - Free Report) is working on positioning itself for the digital phase of retail. This Zacks Rank #5 (Strong Sell) missed the Zacks Consensus for the fiscal fourth quarter but business isn't looking too bad.

Bassett is a well known furniture maker with 92 company- and  licensee-owned stores and a large wholesale network with more than 700 accounts. It makes both furniture and accessories, including custom-built furniture that is ready for delivery within 30 days.

An Earnings Miss in the Fiscal Fourth Quarter

On Jan 18, Bassett reported its fiscal fourth quarter results and missed on the Zacks Consensus Estimate by 6 cents. It reported $0.46 versus the Zacks Consensus of $0.52.

However, Zacks has just one estimate for the quarter and the full year.

Wholesale sales rose 1% to $63.2 million from $62.6 million a year ago.

Comparable store sales fell 1.7% year-over-year but some of that was due to flooding from Hurricane Harvey. Four of the company's stores in Houston were closed for almost 2 weeks.

Excluding those 4 stores, comparable store sales fell just 0.4% in the quarter.

Bassett also tracks written sales, which is the retail dollar value of sales orders taken, rather than delivered, as a key store performance indicator. Written sales for comparable stores actually rose 2.7% year-over-year in the quarter.

In other good news, it intends to open 10 new stores, and reposition 2 to 3, in the next 18 months as it's finding success with both brick and mortar as well as digital.

New Generation 3 Stores

In the third quarter of 2018, Bassett intends to debut, in  Frisco, Texas, its new "Generation 3" prototype store which will showcase Bassett's interior design and customizable home furnishings with the latest technology.

You'll be able to track, from a mobile device, the item, it's creation and then finally when it's being delivered.

Estimates Cut for the Fiscal Year

As I mentioned, Zacks only has one estimate for Bassett, but that estimate was cut in the last month which pushed the fiscal 2018 Zacks Consensus Estimate down to $1.72 from $1.98.

That's the reason the stock has fallen to a Zacks Rank #5 (Strong Sell), even though earnings are still expected to be up 8.9% year-over-year even with the estimate revision.

Stock Falls, Is It a Deal?

Shares have taken a hit during the stock market correction, falling about 15% year-to-date.



They now trade with a forward P/E of 18.5, however, until the #5 (Strong Sell) ranking changes, you probably will want to stay on the sidelines.

If you really want to buy into a furniture company, you may want to consider La-Z-Boy Inc. (LZB - Free Report) instead. It has a Zacks Rank of #2 (Buy) and is also attractively priced, with a forward P/E of 16.

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