Stanley Furniture Co. Inc. (STLY): Price
05/12/14 $2.67, market capitalization 39.63M ,enterprise value of 26.16;
Founded in 1924, Stanley
Furniture designs and manufactures premium residential wood furniture. Manufacturing
is now sourced overseas.Then Stanley furniture
is distributed throughout upscale markets.
The story is simple. April 2014, STLY ceased domestic manufacturing operations for Young America brand. As a result, Robbinsville NC plant closed. This decision creates a focus and an achievable higher ROIC. I view the closing of domestic manufacturing operations as an inflection point.These strategic restructuring moves should materialize in dramatically improved future financial results.
CEO, “After a thorough review of both our
own operations and the current marketplace for nursery and youth furniture,
management and the Board concluded that the Young America business could not
achieve an acceptable level of revenue within an adequate time frame to assure
sustainable profitability and has decided that it is time for our company to
focus its efforts on our profitable and growing Stanley brand”. Orders for Stanley brand were up double digits in the first quarter, even with
the weather-related challenges that impacted retailers across the country. “We
have a healthy Stanley business that is making money. It is supported by a
wonderful heritage, strong product in the field and future pipeline, and we are
looking forward to the prospects of focusing our team solely on the growth and
profitability of this brand in the short-term,” CEO Prillaman
Who else is convinced the
stock will improve? Value investor John Rogers (ARIEL INVESTMENTS) made large
commitment to STLY. Rogers invested in the quarterly period ending 09/30/13. Further,
2,526,635 shares added for the quarterly period 12/30/13.This brings total shares
2,591,708 or 17.01% of STLY shares outstanding. Moreover, small cap value institutions
Royce (1,105,703 shares), Heartland (750,000) and ANCORA ADVISORS invested in STLY
investment now at a loss with no reported selling.
John Rogers purchases
Insider Activity 2012 to 2014
As of 05/13/14:
Market Cap: 40.38M ,Enterprise Value : 26.16M
Price/Sales: 0.43 ,Price/Book: 0.55
Enterprise Value/Revenue : 0.28
Gross Profit (ttm): 9.77M
Total Cash: 14.96M ,Total
Cash Per Share : 1.01
Total Debt: 0.00 , Current
Ratio (mrq): 5.18
Book Value Per Share: 4.81
52-Week Change: -32.00%
Shares Outstanding: 14.84M , Float: 14.02M
% Held by Insiders: 3.92% , % Held by Institutions: 70.50%
Short % of Float (as of Apr 30, 2014): 0.60%
5 Year Average Dividend Yield: 3.00%
Analysis to industry peers (Home Furnishings):
30 companies were reviewed ranging in size from 19 million
to 9.8 billion. The following value
points were noticed:
STLY [1]:lowest or
near lowest shares short as percentage of float at .55%, [2]: worst performing stock price for 24 weeks (-26.13%),
52 weeks (-30.05%), 3 years (-20.53%) [3]: positive 3.3 Z score indicating financial
strength. M score of -1.75 indicating lack
or earnings manipulation [4]: the most
optimistic net insider buys to market size, [5] P/B near 10 year low
Long STLY
