NYSE:HVT) price-to-earnings (or “P/E”) ratio of 14.8x might make it look like a buy right now compared to the market in the United States, where around half of the companies have P/E ratios above 20x and even P/E’s above 38x are quite common. Although, it’s not wise to just take the P/E at face value as there may be an explanation why it’s limited.” data-reactid=”28″>Haverty Furniture Companies, Inc.’s (NYSE:HVT) price-to-earnings (or “P/E”) ratio of 14.8x might make it look like a buy right now compared to the market in the United States, where around half of the companies have P/E ratios above 20x and even P/E’s above 38x are quite common. Although, it’s not wise to just take the P/E at face value as there may be an explanation why it’s limited.

Recent times have been pleasing for Haverty Furniture Companies as its earnings have risen in spite of the market’s earnings going into reverse. It might be that many expect the strong earnings performance to degrade substantially, possibly more than the market, which has repressed the P/E. If not, then existing shareholders have reason to be quite optimistic about the future direction of the share price.

Check out our latest analysis for Haverty Furniture Companies ” data-reactid=”30″> Check out our latest analysis for Haverty Furniture Companies

free report is a great place to start.” data-reactid=”47″>Keen to find out how analysts think Haverty Furniture Companies’ future stacks up against the industry? In that case, our free report is a great place to start.

Does Growth Match The Low P/E?

In order to justify its P/E ratio, Haverty Furniture Companies would need to produce sluggish growth that’s trailing the market.

Retrospectively, the last year delivered a decent 8.0{3e0544090c75b66d16c3eca4d142e2092ea98ee5f79f18046a1f13abafab9023} gain to the company’s bottom line. Still, EPS has barely risen at all in aggregate from three years ago, which is not ideal. So it appears to us that the company has had a mixed result in terms of growing earnings over that time.

Turning to the outlook, the next year should generate growth of 8.1{3e0544090c75b66d16c3eca4d142e2092ea98ee5f79f18046a1f13abafab9023} as estimated by the two analysts watching the company. That’s shaping up to be materially higher than the 4.2{3e0544090c75b66d16c3eca4d142e2092ea98ee5f79f18046a1f13abafab9023} growth forecast for the broader market.

In light of this, it’s peculiar that Haverty Furniture Companies’ P/E sits below the majority of other companies. Apparently some shareholders are doubtful of the forecasts and have been accepting significantly lower selling prices.

The Final Word

Generally, our preference is to limit the use of the price-to-earnings ratio to establishing what the market thinks about the overall health of a company.

Our examination of Haverty Furniture Companies’ analyst forecasts revealed that its superior earnings outlook isn’t contributing to its P/E anywhere near as much as we would have predicted. There could be some major unobserved threats to earnings preventing the P/E ratio from matching the positive outlook. At least price risks look to be very low, but investors seem to think future earnings could see a lot of volatility.

Haverty Furniture Companies has 4 warning signs (and 1 which can’t be ignored) we think you should know about.” data-reactid=”56″>You need to take note of risks, for example – Haverty Furniture Companies has 4 warning signs (and 1 which can’t be ignored) we think you should know about.

list of interesting companies with strong recent earnings growth (and a P/E ratio below 20x).” data-reactid=”57″>It’s important to make sure you look for a great company, not just the first idea you come across. So take a peek at this free list of interesting companies with strong recent earnings growth (and a P/E ratio below 20x).

Get in touch with us directly. Alternatively, email [email protected].” data-reactid=”58″>This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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