Critical Comparison: Pier 1 Imports (PIR) & Haverty Furniture Companies (HVT)

Haverty Furniture Companies (NYSE: HVT) and Pier 1 Imports (NYSE:PIR) are both small-cap retail/wholesale companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitabiliy, risk, dividends, valuation, analyst recommendations, earnings and institutional ownership.

Analyst Ratings

This is a summary of recent ratings and price targets for Haverty Furniture Companies and Pier 1 Imports, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Haverty Furniture Companies 0 2 0 0 2.00
Pier 1 Imports 4 11 2 0 1.88

Haverty Furniture Companies currently has a consensus target price of $23.00, indicating a potential upside of 2.68%. Pier 1 Imports has a consensus target price of $6.08, indicating a potential upside of 30.23%. Given Pier 1 Imports’ higher probable upside, analysts plainly believe Pier 1 Imports is more favorable than Haverty Furniture Companies.

Dividends

Haverty Furniture Companies pays an annual dividend of $0.48 per share and has a dividend yield of 2.1%. Pier 1 Imports pays an annual dividend of $0.28 per share and has a dividend yield of 6.0%. Haverty Furniture Companies pays out 35.0% of its earnings in the form of a dividend. Pier 1 Imports pays out 68.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Pier 1 Imports has raised its dividend for 4 consecutive years. Pier 1 Imports is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

78.4% of Haverty Furniture Companies shares are held by institutional investors. Comparatively, 87.3% of Pier 1 Imports shares are held by institutional investors. 10.3% of Haverty Furniture Companies shares are held by insiders. Comparatively, 5.6% of Pier 1 Imports shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Haverty Furniture Companies and Pier 1 Imports’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Haverty Furniture Companies 3.59% 10.32% 6.47%
Pier 1 Imports 1.82% 13.96% 4.53%

Volatility and Risk

Haverty Furniture Companies has a beta of 1.13, suggesting that its stock price is 13% more volatile than the S&P 500. Comparatively, Pier 1 Imports has a beta of 1.72, suggesting that its stock price is 72% more volatile than the S&P 500.

Earnings and Valuation

This table compares Haverty Furniture Companies and Pier 1 Imports’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Haverty Furniture Companies $827.70 million 0.52 $74.92 million $1.37 16.35
Pier 1 Imports $1.82 billion 0.21 $134.14 million $0.41 11.39

Pier 1 Imports has higher revenue and earnings than Haverty Furniture Companies. Pier 1 Imports is trading at a lower price-to-earnings ratio than Haverty Furniture Companies, indicating that it is currently the more affordable of the two stocks.

Summary

Pier 1 Imports beats Haverty Furniture Companies on 9 of the 17 factors compared between the two stocks.

About Haverty Furniture Companies

Haverty Furniture Companies, Inc. is a retailer of residential furniture and accessories. The Company sells home furnishings in its retail stores and through its Website, havertys.com. As of December 31, 2016, the Company had 124 stores in 16 states in the Southern and Midwest regions. As of December 31, 2016, the Company’s retail store space totaled approximately 4.5 million square feet for 124 stores. It also offers financing through a third-party finance company, as well as an internal revolving charge credit plan. The Company’s retail locations are operated using the Havertys name. It offers mattress product lines, such as Sealy, Tempur-Pedic, Serta, Stearns & Foster and Beautyrest Black. The Company’s customers are college educated women in middle to upper-middle income households. The Company stores are located in areas, including Florida, Texas, North Carolina, Tennessee and Maryland.

About Pier 1 Imports

Pier 1 Imports, Inc. is an importer of home decor and furniture. The Company’s operations consist of retail stores and an e-commerce Website conducting business under the name Pier 1 Imports, which sells a range of decorative accessories, furniture, candles, housewares, gifts and seasonal products. The Company’s categories of merchandise include decorative accessories and furniture. The decorative accessories category includes decorative accents and textiles, such as rugs, wall decorations and mirrors, candles, fragrance, gifts and seasonal items. The furniture category includes furniture and furniture cushions to be used in living, dining, office, sunrooms and patios. This merchandise group is generally made of metal or handcrafted natural materials, including rattan, pine, acacia, oak and other woods with either natural, stained, painted or upholstered finishes.

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