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Brought to you by: Dear Reader, We have some BIG UPDATES for all you Wall Street Connected subscribers. [And you need to take action now to make sure you don't miss out!]( Our newsletter got a complete makeover. We overhauled the format and layout of the newsletter, making it easier to read and simpler to follow. And gave it a nifty new title - THE SPILL [But you won't receive this newsletter unless you sign up HERE.]( Because pretty soon, Wall Street Connected will disappear FOREVER! Sponsored [Which Space Billionaire Should Investors Follow?]( Jeff Bezos and Elon Musk dominate the headlines, but that doesn't mean their companies are the best investments. Four lesser-known space stocks could climb much higher. [You can see them free today here.]( What weâre watching [50% off this furniture stock with Finance]( A look at interior design and home furnishing store Ethan Allen. [Watch Now]( Stock Analysis Ethan Allenâs Massive Dividend & Value Furniture is hard to come by. Try ordering a bed frame and youâre likely to wait six months or more. That puts pricing power in the hands of sellers. We think this is a multi-year trend that lasts into 2025. Interior design and home furnishing store Ethan Allen (ETD) saw earnings nearly triple from their 2019 levels. Plus the stock pays a healthy 4.26% dividend. Now, the home furnishings industry isnât well known for its fundamental value. So, this is a stock pick with some timeliness to it. And hereâs why. Ethan Allen Interiorâs Business Ethan Allen Interiors manufactures and sales interior design products that cater to the home furnishings market. The company operates 302 design centers across the US and worldwide of which 161 are independently owned and 141 are company operated. Revenues are broken down into two categories: - Retail (81% of sales) - Sales of home furnishings and accents
- Wholesale (19% of sales) - Products shipped to a retail network of design centers and other third-party contract companies that sell its products. Like many retailers, Ethan Allen has increased its online presence with applications like their 3D Room Planner that allows designers to conduct virtual design sessions without entering the customerâs home. Clientâs can also use a lighter version of the 3D Room Planner to design a solace personalized to their own roomâs dimensions and features. Additionally, digital channels are now the primary way of communicating with customers. 75% of Ethan Allenâs products are manufactured in American workshops, limiting their exposure to the supply chain problems that plague many of their competitors. Currently, the company offers three strategic merchandising projections: - Classing (40% of offerings)
- Country & Coastal (40% of offerings)
- Modern (20% of offerings) However, Ethan Allen is especially adept at customization, giving customers greater flexibility in design and choice. Financials In the last decade, Ethan Allenâs financials were nothing to write home about. While they paid a consistent dividend that grew over time, margins remained relatively flat as did sales. It wasnât until recently the company saw revenues shoot up along with gross margin and operating income. That led to the companyâs best earnings year ever not to mention significant cash flows. Notably, Ethan Allen doesnât spend much capital and maintains a fairly consistent operating cash flow. Thatâs helped the company keep its capital leases to a bit more than $100 million with zero long-term debt. However, the nearly $100 million in cash covers all capital leases. And with more than 300 million in property and equipment plus an average of $150 million in inventory, Ethan Allenâs balance sheet is strong enough to support their current dividend payouts. Valuation Despite improved financials, shares of Ethan Allen are only up 16.23% for the year. Thatâs put the stock at a pretty sweet valuation. Compared to the consumer discretionary sector, Ethan Allenâs stock is essentially running a 50% off sale. Normally, price-to-earnings ratios can be a bit misleading. However, with the low debt and consistent performance, we feel it accurately represents the companyâs value. Given the robust balance sheet where assets outweigh liabilities, combined with a price-to-cash flow ratio of 5.67x, we believe shares are extremely undervalued. Our Opinion - 9/10 To be fair, management doesnât seem to have any designs (pun intended) to generate additional growth through acquisitions or product expansion. Nevertheless, we look at the valuation and shareholder friendly dividend as creating more than enough reason to like the stock at current price. Given the current valuation and outlook, we see $30 per share as an easy target within the next year, leaving +30% upside. [Make sure to sign up for The Spill to keep receiving our premier investment newsletter.]( #
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1325 Avenue of the Americas, Floor 27 & 28 New York, New York 10019 Disclaimer: This is not investment advice. This InvestingChannel, Inc. newsletter is for information purposes only and opinion-based. Futures, forex, stock, and options trading are not appropriate for all investors. There is a substantial risk of loss associated with trading these markets. Losses can and will occur. No system or methodology has ever been developed that can ensure returns or against losses. No representation or implication is being made that using any of these methodologies or systems will generate returns or ensure against losses. Investors should be cautious about any and all investments and are advised to conduct their own due diligence prior to making any investment decisions. [Link](