For its first quarter, Mattress Firm Holding Corp (NASDAQ:MFRM) earned an adjusted $0.38 per share, rising 24% from the prior year quarter and topping analyst estimates by $0.02. Revenue also rose 32% to $276 million. It also offered full year revenue guidance of $1.24 billion to $1.25 billion, which topped the consensus estimate of $1.23 billion. Its full-year earnings guidance was in line with analyst estimates.
Mattress Firm Holding Corp (NASDAQ:MFRM) expanded heavily last year, purchasing 181 Mattress Giant stores, 34 Mattress Xpress stores, and 27 stores from Factory Mattress & Water Bed Outlet of Charlotte. Mattress Firm Holding Corp (NASDAQ:MFRM)’s aggressive growth has fueled a massive market consolidation of mattress retailers, and that growth is reflected in its strong top and bottom line growth. However, same-store sales, which exclude all of these new stores added over the past year, slid 5.2%. Mattress Firm expects same-store sales to rise to a “low single-digit” percentage by the end of the fiscal year next January.
Wedbush analyst Joan Storms recently gave the stock a notable upgrade, bumping up the price target from $40 to $45, stating that the company’s recent acquisitions and rising demand for mattresses would benefit the company later this year. Shares of Mattress Firm are considerably more expensive than Tempur Sealy, trading at 16.7 times forward earnings, but it has a much lower five-year PEG ratio of 0.78, suggesting much stronger bottom line growth ahead.
Out with the new, in with the old
Haverty Furniture Companies, Inc. (NYSE:HVT), which was founded in 1885, will also benefit from robust demand for mattresses and furniture. The company has struggled in recent years after the housing bubble caused annual earnings to plunge nearly 90% in 2007. The subsequent financial crisis in 2008 and 2009 sent the company deep into the red.
Yet, Haverty Furniture Companies, Inc. (NYSE:HVT) has been incredibly resilient. The company bounced back strongly in 2012, reporting full-year earnings of $0.67, proving that it would take more than a few years of unprofitability to finish off this old company. After all, this is the same company that went public in 1929 and survived The Great Depression, along with all of the subsequent economic shocks to date.
Haverty Furniture Companies, Inc. (NYSE:HVT)’s first-quarter earnings, reported on May 1, indicated that this winning streak would continue throughout 2013. Diluted earnings per share more than tripled to $0.36, while revenue rose 13.8% to $186.1 million. Same-store sales surged 11.5%. Moreover, analysts still expect the company to grow its full-year earnings by 63% in fiscal 2013.
Although shares of Haverty Furniture Companies, Inc. (NYSE:HVT) have more than doubled over the past twelve months, it is still trading at 16.9 times forward earnings with a five-year PEG ratio of 1.56. While this suggests that its growth is leveling off, it still has room to run, especially if the housing market continues to improve.
The Foolish bottom line
If you believe that the housing market is still growing at a healthy rate, and not a bubble, as some bearish analysts claim, then bed and furniture stocks are a conservative, indirect way to cash in on that growth.
Tempur Sealy is a classic value stock, largely ignored by investors, but it could turn around in the coming year, thanks to its strategic merger with Sealy. Mattress Firm is a solid growth stock, and is well poised to profit handsomely from the housing boom thanks to its aggressive expansion. Last but not least, Haverty Furniture Companies, Inc. (NYSE:HVT) is a proven survivor that could continue outgrowing the rest of the industry at a double-digit rate.
The article 3 Indirect Ways to Profit From the Housing Boom originally appeared on Fool.com.
Leo Sun has no position in any stocks mentioned. The Motley Fool owns shares of Tempur-Pedic International. Leo is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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