Ethan Allen Interiors Earnings Preview

Motley Fool Staff
Updated

Investors braced for a bumpy ride ahead of Ethan Allen Interiors' (NYS: ETH) earnings announcement, as the company has wavered between beating and falling short of analyst predictions during the past fiscal year. The company will unveil its latest earnings on Wednesday, Aug. 3. Ethan Allen Interiors is a manufacturer and retailer of home furnishings and accessories, offering a full complement of home decorating and design solutions through one of the country's largest home-furnishing retail networks.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on Ethan Allen, with four of five rating it hold. Analysts don't like Ethan Allen as much as competitor La-Z-Boy overall. Four out of five rate La-Z-Boy a buy, compared with one of five for Ethan Allen. Analysts haven't adjusted their rating of Ethan Allen for the past three months.

  • Revenue forecasts: On average, analysts predict $178.3 million in revenue this quarter. That would represent a rise of 9.2% from the year-ago quarter.

  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.21 per share. Estimates range from $0.10 to $0.27.

What our community says:
The majority of CAPS All-Stars see Ethan Allen as a good bet, with 59.5% assigning it an "outperform" rating. The community is split on the stock, with 54.4% Fools giving it an "outperform" rating and 45.6% an "underperform" rating. The message boards have been quiet lately, with only 75 posts in the past 30 days. Ethan Allen's bearish CAPS rating of two out of five stars falls short of the Fool community's sentiment.

Management:
The company upped its gross margin by 2.1 percentage points in the last quarter. Revenue rose 10.6% while cost of sales rose 6% to $79.8 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q3

Q2

Q1

Q4

Gross Margin

51%

51.8%

50%

49.5%

Operating Margin

2.9%

6%

3.3%

7.6%

Net Margin

2.2%

8.5%

2.3%

(16.3%)

One final thing: If you want to keep tabs on Ethan Allen's movements, and for more analysis on the company, make sure you add it to your Watchlist.

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