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Category: Stock Market and Ethan Allen
Date: 5 February 2020 Stock Price: $15.84 We take a look at the 2nd quarter earnings report of their 2020 fiscal year of Ethan Allen, a global interior design brand with roughly 1 500 interior designers that sells their products via 300 design centres worldwide. The group's stock price has been struggling for a long time. Is there light at the end of the tunnel for Ethan Allen?
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About Ethan Allen
Ethan Allen is an iconic global interior design brand with unparallelled recognition for quality, service, and value. We continually innovate ways to run our business in the best interests of our stakeholders and constantly reinvent our product offerings to stay relevant. As a vertically integrated company, our business is led by a highly experienced management team who work to leverage growth opportunities our distinct business model provides. We have approximately 1,500 interior designers in our North American Design Centers. Our products are sold exclusively through 300 Design Centers worldwide and a state-of-the-art ecommerce website.
Overview of Ethan Allen's 2nd quarter 2020 earnings report
Data below refers to quarterly data unless specified otherwise:
- Sales: $173.921 million (down from $187.785 million for the same period of the previous year)
- Sales decreased by -7.4% over the last 12 months
- Cost of sales: $80.127 million (down from $86.335 million for the same period of the previous year)
- Cost of sales decreased by -7.2% over the last 12 months
- Net income: $14.106 million (up from $8.840 million profit for the same period of the previous year)
- Diluted earnings per share: $0.53 (up from $0.33 profit for the same period of the previous year)
- PE ratio of Ethan Allen: 9.29
- Dividend declared: $0.21
- Dividend yield: 4.26%
- Diluted weighted-average shares outstanding: 26.713 million (down from 27.940 million for the same period of the previous year)
- Cash and cash equivalents: $45.876 million
- Cash and cash equivalents per share: $1.71
- Cash and cash equivalents makes up 8.7% of Ethan Allen's market capital
- Cash and cash equivalents makes up 7% of Ethan Allen's total assets
- Accounts receivable: $12.345 million
- Accounts receivable makes up 1.9% of Ethan Allen's total assets
- Inventories: $151.421 million
- Inventories makes up 23.2% of Ethan Allen's total assets
- Stockholders equity in Ethan Allen: $370.5039 million
- Stockholders equity per share: $13.87
- So Ethan Allen is trading a 1.42 times its stockholders equity which is outside the expected range of between 2 and 4 which most firms tend to trade at.
Ethan Allen's management commentary on their 2nd quarter 2020 earnings report
Danbury, CT, Feb. 04, 2020 (GLOBE NEWSWIRE) -- Ethan Allen Interiors Inc. (“Ethan Allen” or the “Company”) (NYSE: ETH) reported financial results for its second quarter ended December 31, 2019.
Farooq Kathwari, Ethan Allen’s Chairman, President and CEO commented, “As we mentioned in our press release on January 13, 2020, the implementation of the Ethan Allen Member Program was expected to impact our sales and profitability during the initial year and, in particular, for the quarters ending December 31, 2019 and March 31, 2020. The Ethan Allen Member Program provides special members-only pricing, free shipping and white glove in-home delivery, complimentary interior design service, and in our U.S. design centers, access to special financing options.”
Farooq Kathwari, Ethan Allen’s Chairman, President and CEO commented, “As we mentioned in our press release on January 13, 2020, the implementation of the Ethan Allen Member Program was expected to impact our sales and profitability during the initial year and, in particular, for the quarters ending December 31, 2019 and March 31, 2020. The Ethan Allen Member Program provides special members-only pricing, free shipping and white glove in-home delivery, complimentary interior design service, and in our U.S. design centers, access to special financing options.”
“We continue to strengthen our product offerings, projection and marketing. In January, we distributed 2.5 million copies of our direct mail magazine and launched a strong national radio program and digital advertising. Our plans for February and March are to continue our strong marketing in various mediums including television, digital, radio and print,” Mr. Kathwari continued.
“We are pleased that our unique vertical structure continues to provide strong operating leverage to allow us to consistently return value to our shareholders through regular quarterly dividends, periodic special cash dividends and share repurchases. During the second quarter we paid $5.6 million in cash dividends and repurchased 545,727 shares, representing 2.1% of our outstanding shares. On January 13, 2020, the Board of Directors increased the share repurchase authorization to three million shares and we plan to continue to strategically repurchase our shares. We continue to strengthen our talent, marketing, retail network, products, manufacturing, logistics and technology, while also maintaining our focus on good governance and social responsibility,” Mr. Kathwari concluded.
Cash Dividends paid during fiscal 2020 totaled $10.7 million, an increase of $0.5 million over a year ago due to the 10.5% increase in the quarterly dividend to $0.21. On November 13, 2019, the Company’s Board of Directors approved a regular quarterly dividend of $0.21 per share. The cash dividend of $5.6 million was paid on January 23, 2020, to common stockholders of record at the close of business on January 9, 2020.
“We are pleased that our unique vertical structure continues to provide strong operating leverage to allow us to consistently return value to our shareholders through regular quarterly dividends, periodic special cash dividends and share repurchases. During the second quarter we paid $5.6 million in cash dividends and repurchased 545,727 shares, representing 2.1% of our outstanding shares. On January 13, 2020, the Board of Directors increased the share repurchase authorization to three million shares and we plan to continue to strategically repurchase our shares. We continue to strengthen our talent, marketing, retail network, products, manufacturing, logistics and technology, while also maintaining our focus on good governance and social responsibility,” Mr. Kathwari concluded.
Cash Dividends paid during fiscal 2020 totaled $10.7 million, an increase of $0.5 million over a year ago due to the 10.5% increase in the quarterly dividend to $0.21. On November 13, 2019, the Company’s Board of Directors approved a regular quarterly dividend of $0.21 per share. The cash dividend of $5.6 million was paid on January 23, 2020, to common stockholders of record at the close of business on January 9, 2020.
Ethan Allen (NYSE: ETH) stock price history
The image below, obtained from Google, shows the stock price history of Ethan Allen over the last 5 years. And it's not been a very good time for Ethan Allen stockholders. 5 years ago the stock was trading at around $27.70 a stock and its currently trading at $15.84 a stock. That's a loss of -42.8% suffered by Ethan Allen stockholders over the last 5 years.
The stock of Ethan Allen is trading at very close to its 52 week low of $15.82 and is far away from its 52 week high of $23.11 which to us is a clear indication that the short term sentiment and momentum of Ethan Allen stock is very negative at this point in time. And the graphic below showing Ethan Allen's stock price history over the last 5 years shows the almost constant decline in the group's stock price since early 2017.
The stock of Ethan Allen is trading at very close to its 52 week low of $15.82 and is far away from its 52 week high of $23.11 which to us is a clear indication that the short term sentiment and momentum of Ethan Allen stock is very negative at this point in time. And the graphic below showing Ethan Allen's stock price history over the last 5 years shows the almost constant decline in the group's stock price since early 2017.
Recent coverage of Ethan Allen
The extract below discusses the latest news regarding Ethan Allen as obtained from TheStreet.com
Danbury, CT, Jan. 29, 2020 (GLOBE NEWSWIRE) -- Ethan Allen Interiors Inc. ("Ethan Allen") (ETH) - Get Report announced today that its Board of Directors has declared a regular quarterly cash dividend of $0.21 per share, which will be payable to shareholders of record as of Thursday, April 9, 2020, and will be paid on Thursday, April 23, 2020.
Farooq Kathwari, Chairman and CEO commented, "We are pleased to continue our payment of this regular quarterly cash dividend due to the continued strengthening of our enterprise."
Read the full article here
Danbury, CT, Jan. 29, 2020 (GLOBE NEWSWIRE) -- Ethan Allen Interiors Inc. ("Ethan Allen") (ETH) - Get Report announced today that its Board of Directors has declared a regular quarterly cash dividend of $0.21 per share, which will be payable to shareholders of record as of Thursday, April 9, 2020, and will be paid on Thursday, April 23, 2020.
Farooq Kathwari, Chairman and CEO commented, "We are pleased to continue our payment of this regular quarterly cash dividend due to the continued strengthening of our enterprise."
Read the full article here
Ethan Allen (NYSE: ETH) latest stock valuation
So what is Ethan Allen's stock worth based on the release of their latest earnings report? Based on Ethan Allen's latest earnings report our valuation models provide a target price (full value price) for Ethan Allen's stock at $21.30 a stock (down strongly from our 1st quarter 2020 earnings report valuation of Ethan Allen). We therefore believe that the stock of Ethan Allen's is undervalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $21.30. Therefore we believe a good entry point into Ethan Allen's stock is at $19.20 or below. Since the stock of Ethan Allen's is trading at well below our recommended entry price we rate Ethan Allen's stock as a buy
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $21.30. Therefore we believe a good entry point into Ethan Allen's stock is at $19.20 or below. Since the stock of Ethan Allen's is trading at well below our recommended entry price we rate Ethan Allen's stock as a buy
Next earnings release date for Ethan Allen
It is expected that Ethan Allen (NYSE: ETH) 2nd quarter 2020 earnings report will be released early May 2020