HVN is a divisive stock, on one hand Aussie’s love the ‘can do’ attitude and forthright rhetoric from Gerry Harvey, and the stock looks cheap trading on an Est PE of 11x and 8% expected yield, but on the other hand, those who have looked at the stock over the years (like MM) and see how they account for various aspects of their operation, it’s certainly not as simple and forthright as Gerry would have us believe.
Ultimately, we view HVN as a lower-quality operator relative to JBH, and we expect continued challenges in big-ticket items. Lower sales will have an impact on margins which amplifies the downside risk to earnings at a time when the share price has rallied nearly 20% from the lows.
- The company reports on the 31st giving us more insight then, however, just like JBH, the recent bounce in share price has us concerned.
MM is neutral toward HVN
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