In the case of Ethan Allen (NYSE:ETH) and the rest of the furniture industry, the past couple of years haven't been good ones. A lot of red ink has been shed, and more is likely to follow. The question to answer then is whether value exists in this furniture heap.

IN PICTURES: 6 Major Credit Card Mistakes
5-Year Returns: January 13, 2006 to January 11, 2011




Company


Market Cap


Return


P/S


P/B


Leggatt & Platt (NYSE:LEG)


$3.35 billion


-4.67%


1.0


2.24


La-Z-Boy (NYSE:LZB)


$453.0 million


-39.15%


0.39


1.3


Pier 1 (NYSE:PIR)


$1.25 billion


+17.58%


0.92


3.54


Ethan Allen (NYSE:ETH)


$577.43 million


-48.8%


.93


2.22


Haverty Furniture (NYSE:HVT)


$280.25 million


-3.02%


0.45


1.1


Furniture Brands International (NYSE:FBN)


$273.95 million


-77.94%


0.25


0.92


Natuzzi S.p.A (NYSE:NTZ)


$189.1 million


-54.42%


.27


.46


Hooker Furniture (Nasdaq:HOFT)


$147.9 million


-18.64%


0.7


1.18


Stanley Furniture (Nasdaq:STLY)


$45.51 million


-82.32%


.3


.78












S&P 500




-.85%


A Bloodbath
The table above says all that needs to be said about the furniture business. Not too many consumers are buying $2,000 sofas, and it shows in the financial reports. Ethan Allen, for example, has posted negative EPS for the previous two fiscal years. This defintely isn't flattering and is a good illustration of the difficulties that the sector continues to deal with. (Find out where to turn when looking to invest in a tumultuous market. Read Industries That Thrive On Recession.)

Of all the companies on the list, the largest is Leggett & Platt, which happens to be a maker of components that go into sofa, chair and bed recliners. While it has a seen slight sales slide in recent years, it's still managing to make money, a prime reason why its stock has only declined 4.67% in the past five years, which is not that bad compared to others on the list. Investors may want to look further into companies that supply parts, as opposed to making the product. When an industry gets hit, it seems the top suppliers are sometimes better able to ride out the storm. Any analysis of home furnishing stocks should begin with Leggett & Platt.

The Bottom Line
If you're a conservative investor, Leggett & Platt is your best bet, given its healthy financial condition, strong free cash flow and 4.7% yield. If you're a more adventurous contrarian, have a look at Ethan Allen which has stock that has lost nearly 50% of its value in the past five years. (For more related trading, review 10 Reasons Why Moving Might Not Make You Richer.)

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Tickers in this Article: LEG, LZB, PIR, ETH, HVT, FBN, NTZ, HOFT, STLY

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