Basset Furniture Industries Pays Special Dividend
If you need evidence that insider activity is an indicator of future stock performance, look no further than Basset Furniture Industries (NASDAQ: BSET). An insider in the company, William C. Warden, Jr., a director of the company, bought 5,000 shares in mid-February right when the company was producing the results it delivered in late March. His purchase was small relative to the company’s size, only about 0.04% of the market cap, but it is a notable purchase given the solid 7% of company stock held by insiders and the institutions are buying the stock too. The last insider transaction was a sale but it happened way back in April of 2021 so isn’t much of an indicator for today.
The institutional activity turned net-bearish in Q1 of 2022 but only marginally so. The net of activity over the last year, however, is overwhelmingly bullish and equal to 6.9% of the market cap with shares trading near $16.50. The takeaway here is that institutional interest is high at 62.5% and it has been growing. Institutional selling may continue to cap gains in the near term but we think the bulk of selling is over given the strength of results, the special dividend, and the new repurchase program.
Basset Furniture Industries Exceeds Expectations
As odd as it may sound, the trade war with China was a blessing for the furniture industry and helped get it and Basset Furniture Industries set up for the pandemic. The pandemic unleashed new demand and those trends remain strong, even as COVID-related tailwinds diminish in other sectors. The company reported $117.86 million in revenue for a gain of 15.9% over last year. The revenue beat the consensus estimates by 730 basis points as well and incoming orders suggest business will remain strong for the foreseeable future. On a segment basis, Wholesale deliveries rose by 19% although backlogs in this segment have begun to come down. The retail end grew by 6.1% and is still seeing robust demand.
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The company logged a decline in margin and attributed it to an inability to keep pace with inflation although they did do a fairly good job. Margins contracted by nearly 400 basis points at the gross level and a smaller 20 basis points at the operating level which is below the analyst's consensus. This left the GAAP earnings at $0.44 or up 19% from last year and $0.08 better than expected. The company does not give guidance but the vibe is positive and supported by housing and consumer trends. In our view, we expect to see Basset Furniture Industries YOY growth to slow but not recede.
Basset Furniture Pays Investors
Basset Furniture Industries recently shed a freight-based subsidy making it a pure play on furniture once again. The sale brought in nearly $90 million in proceeds that are being used to shore up the balance sheet, pay a special dividend of $1.50 per share. The special dividend is worth over 9% to shareholders on top of the existing dividend and the repurchase program. The repurchase program is now worth $40 million or about 23% of the market cap.
The Technical Outlook: Basset Furnitures Bottomed, Now What?
Price action in Basset Furniture bottomed over the past few months but is struggling to effect a full reversal. Even now, after the Q1 results and capital return, price action is moving lower and may continue to move lower in the near term. Longer-term, we expect to see Basset exit its range on demand for dividend yield and the robust buyback program.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| Bassett Furniture Industries (BSET) | $13.11 | -1.4% | 5.49% | -19.57 | Hold | N/A |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.
