Flexsteel: 17% FCF Yield, Record 5-Year High EPS And Backlog On Strong Housing Market
Published Nov 19, 2020 on Seeking Alpha

Seeking AlphaLong Ideas | Consumer Flexsteel: 17% FCF Yield, Record 5-Year High EPS And Backlog On Strong Housing MarketNov. 19, 2020 4:09 PM ET|| About: Flexsteel Industries, Inc. (FLXS), Includes: BSET, HOFT, HVT, LZBby: Value Investment PrincipalsValue Investment Principals Small-cap, Deep ValueSummaryFlexsteel strong housing beneficiary; 52% stock upside.
Stellar Sept. quarter: 60% order growth with record backlog of $89 million (3 months of sales).
Two-year restructuring over, pure play housing company now at inflection point.
The company has an FCF yield of 17% on 06/2022 estimates.
Under-covered gem with a new $30 million (14% of the market cap) repurchase program.
Flexsteel (Nasdaq: FLXS) is a company that is at its inflection point and has 52% upside to our $42.50 price target, with a booming housing market providing strong tailwinds. The company has just released its September quarter results and the numbers were just out of the ballpark. Flexsteel had a record order jump with a backlog amounting to $89 million, primarily spurred by residential furniture order growth of 60%. The company's EPS has rebounded, and the stock price is looking to rally with further earnings surprises for investors to look forward to.
The company's move to exit various commercial businesses (details below) and focus on residential completely cannot have been timelier for investors. As housing continues to surge, likely for another couple years according to housing executives with no signs of slowing, we see Flexsteel as a prime beneficiary. Their very attractive "value" chart offers favorable risk-reward, in our opinion. With that being said, Flexsteel has mounting cash on the B/S with no debt, and a three-year repurchase program in the pipeline, indicating to investors that management is bullish on this stock.
Deep Value Metrics for Flexsteel
For this current FY06/2021 and next FY06/2022 (estimates taken from our model), the FCF yield is an extremely... Read more