On Friday, Benchmark analyst Reuben Garner updated the price target for HNI Corp (NYSE: NYSE:HNI), a company specializing in office furniture and hearth products, to $63.00 from the previous figure of $57.00, while reiterating a Buy rating on the stock. This adjustment follows HNI Corporation's announcement of its second-quarter 2024 financial performance.
HNI Corporation reported its earnings for the second quarter on Thursday, revealing that both earnings before interest, taxes, depreciation, and amortization (EBITDA) and earnings per share (EPS) exceeded consensus expectations. This was noteworthy despite the company's revenue falling short of forecasts.
The company's internal efforts to transform profits, combined with sales from its Hearth & Home Technologies (HHT) division and related synergies, were credited for boosting margins to their highest levels in decades.
The firm anticipates that the second half of 2024 will see an increase in year-over-year sales for both of HNI's primary segments. The Workplace Furnishings division is expected to see a low single-digit percentage increase, while the Residential Building Products division is projected to experience a mid single-digit percentage growth. This sales growth is expected to contribute to a record-setting full-year EPS for the company.
As a result of the strong quarterly performance, Benchmark has revised its EPS estimates for HNI Corp upwards by ten cents for the current year and the next, setting them at $3.20 and $3.70, respectively. The revised price target of $63 reflects the firm's confidence in HNI's earnings momentum and market position, given the positive industry indicators and the company's recent achievements.
In other recent news, HNI Corporation has reported an impressive 44% increase in its non-GAAP earnings per share (EPS) for the second quarter of the fiscal year 2024. The company's two major segments, Workplace Furnishings and Residential Building Products, saw significant year-over-year non-GAAP operating profit increases of 67% and 17% respectively.
HNI Corporation also highlighted the successful merger with Kimball International, which is projected to deliver $50 million in cost synergies. The company is optimistic about its future, expecting continued revenue growth and elevated profit growth visibility through 2026, primarily driven by margin expansion and investment in growth opportunities. However, it anticipates some contract business volatility which may impact revenue and margins.
The company is also projecting mid-single digit revenue growth for its Residential Building Products segment in the latter half of 2023. These are recent developments that reflect HNI Corporation's strong financial position and strategic growth plans.
InvestingPro Insights
Following the upbeat earnings report from HNI Corp, InvestingPro data highlights several key metrics that may be of interest to investors. The company's market capitalization stands at a solid $2.55 billion, and it boasts a Price-to-Earnings (P/E) ratio of 20.63, which adjusts to an even more attractive 14.38 when considering the last twelve months as of Q2 2024. This suggests that the company is trading at a reasonable price relative to its earnings. Additionally, the PEG ratio—a metric that relates the P/E ratio to the growth rate of the company's earnings—is quite low at 0.49, indicating potential undervaluation given expected earnings growth.
InvestingPro Tips further enrich the narrative with insights that HNI Corp has raised its dividend for an impressive 13 consecutive years and maintains a strong shareholder yield. Moreover, the company's net income is expected to grow this year, with 2 analysts having revised their earnings upwards for the upcoming period. Such consistent dividend growth and positive earnings revisions may signal confidence in the company's financial health and future prospects.
For those interested in further analysis and additional InvestingPro Tips for HNI Corp, consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. There are 15 more InvestingPro Tips available, providing a deeper dive into the company's performance and expectations. Visit https://www.investing.com/pro/HNI for more details.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.