Let’s dig into the relative performance of Purple (NASDAQ:PRPL) and its peers as we unravel the now-completed Q3 home furnishings earnings season.
A healthy housing market is good for furniture demand as more consumers are buying, renting, moving, and renovating. On the other hand, periods of economic weakness or high interest rates discourage home sales and can squelch demand. In addition, home furnishing companies must contend with shifting consumer preferences such as the growing propensity to buy goods online, including big things like mattresses and sofas that were once thought to be immune from e-commerce competition.
The 5 home furnishings stocks we track reported a mixed Q3. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 47,744% above.
While some home furnishings stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3.2% since the latest earnings results.
Purple (NASDAQ:PRPL)
Founded by two brothers, Purple (NASDAQ:PRPL) creates sleep and home comfort products such as mattresses, pillows, and bedding accessories.Purple reported revenues of $118.6 million, down 15.3% year on year. This print fell short of analysts’ expectations by 6.3%. Overall, it was a mixed quarter for the company with full-year EBITDA guidance exceeding analysts’ expectations.
"While our third quarter revenue was challenged, we are encouraged by both our year-to-date performance modestly exceeding the broader industry and the sustained improvements in our profitability," said CEO Rob DeMartini.
Purple scored the highest full-year guidance raise but had the weakest performance against analyst estimates and weakest performance against analyst estimates of the whole group. Still, the market seems discontent with the results. The stock is down 1.3% since reporting and currently trades at $0.86.
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Best Q3: La-Z-Boy (NYSE:LZB)
The prized possession of every mancave, La-Z-Boy (NYSE:LZB) is a furniture company specializing in recliners, sofas, and seats.La-Z-Boy reported revenues of $521 million, up 1.9% year on year, outperforming analysts’ expectations by 3%. The business had a strong quarter with an impressive beat of analysts’ adjusted operating income estimates.
La-Z-Boy pulled off the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems content with the results as the stock is up 1.3% since reporting. It currently trades at $42.79.
Leggett & Platt (NYSE:LEG)
Founded in 1883, Leggett & Platt (NYSE:LEG) is a diversified manufacturer making products for various industries.Leggett & Platt reported revenues of $1.10 billion, down 6.3% year on year, in line with analysts’ expectations. It was a slower quarter as it posted EPS guidance for next quarter missing analysts’ expectations significantly.
Leggett & Platt delivered the weakest full-year guidance update in the group. As expected, the stock is down 5.8% since the results and currently trades at $11.45.
Mohawk Industries (NYSE:NYSE:MHK)
Established in 1878, Mohawk Industries (NYSE:MHK) is a leading producer of floor-covering products for both residential and commercial applications.Mohawk Industries reported revenues of $2.72 billion, down 1.7% year on year. This number topped analysts’ expectations by 0.7%. More broadly, it was a slower quarter as it recorded EPS guidance for next quarter missing analysts’ expectations significantly and organic revenue in line with analysts’ estimates.
The stock is down 10% since reporting and currently trades at $136.72.
Tempur Sealy (NYSE:TPX)
Established through the merger of Tempur-Pedic and Sealy in 2012, Tempur Sealy (NYSE:TPX) is a bedding manufacturer known for its innovative memory foam mattresses and sleep productsTempur Sealy reported revenues of $1.3 billion, up 1.8% year on year. This print surpassed analysts’ expectations by 0.9%. Aside from that, it was a mixed quarter with full-year EPS guidance slightly missing analysts’ expectations.
The stock is up 7.3% since reporting and currently trades at $53.51.
Market Update
As a result of the Fed's rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed's 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump's victory in the US Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain. Said differently, there's still much uncertainty around 2025.Want to invest in winners with rock-solid fundamentals? Check out our and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
This content was originally published on Stock Story
