Here are five stocks added to the Zacks Rank #1 (Strong Buy) List today:Flexsteel Industries, Inc. (FLXS) : This manufacturer of upholstered furniture has seen the Zacks Consensus Estimate for its current year earnings increasing 7.4% over the last 60 days.Rockwell Automation, Inc. (ROK) : This industrial automation and digital transformation solutions company has seen the Zacks Consensus Estimate for its current year earnings increasing 5.7% over the last 60 days.The E.W. Scripps Company (SSP) : This media ...

Group 1 - Greystone Housing Impact Investors LP (GHI) has seen a 10.1% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days and offers a dividend yield of 12.4%, significantly higher than the industry average of 0.0% [1] - Virtu Financial, Inc. (VIRT) has experienced an 8.5% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days, with a dividend yield of 2.3%, also above the industry average of 0.0% [2] - Flexsteel Industries, Inc. (FLXS) has had a 7.4% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2]

Company Performance - Flexsteel Industries, Inc. (FLXS) reported strong financial momentum in its fiscal Q3 results, showcasing better performance compared to industry peers [1] - The company continues to demonstrate robust financial health, indicating a positive outlook for future growth [1] Investment Philosophy - The investment philosophy focuses on identifying mispriced securities by understanding the drivers behind a company's financials, often revealed through a DCF model valuation [1] - This approach allows for a flexible investment strategy that encompasses various stock prospects, rather than being confined to traditional value, dividend, or growth investing [1]

Financial Performance - Net sales for the quarter ended March 31, 2025, were $114.0 million, an increase of 6.3% compared to $107.2 million in the prior year quarter[57] - For the nine months ended March 31, 2025, net sales were $326.5 million, an increase of 8.1% from $301.9 million in the prior-year period[67] - Net loss for the quarter ended March 31, 2025, was $3.7 million, or $(0.71) per diluted share, compared to net income of $1.8 million, or $0.33 per diluted share in the prior year quarter[65] Operational Metrics - Home furnishings backlog increased by 25.8% to $78.3 million as of March 31, 2025, compared to $61.5 million in the prior year quarter[58] - Gross margin for the quarter ended March 31, 2025, was 22.2%, up 50 basis points from 21.7% in the prior year quarter[59] - Selling, general and administrative expenses decreased to $17.1 million, or 15.0% of net sales, compared to 16.5% in the prior year quarter[60] Cash Flow and Financing - Net cash provided by operating activities for the nine months ended March 31, 2025, was $21.4 million, down from $24.4 million in the prior year[77] - The company completed the sale of its Dublin, Georgia facility, recording a pre-tax gain of $5.0 million during the nine-month period[70] - Income tax expense for the nine months ended March 31, 2025, was $3.3 million, with an effective rate of 25.6%, compared to $2.5 million and 30.8% in the prior-year period[73] Debt and Credit Facilities - As of March 31, 2025, there were no outstanding borrowings under the Credit Agreement, exclusive of fees and letters of credit, with letters of credit outstanding totaling $0.9 million[86] - The Credit Agreement provides for up to an $85 million revolving line of credit, with a financial covenant to maintain a fixed coverage ratio of not less than 1.00 to 1.00[83] - The interest rate on borrowings under the amended Credit Agreement is based on the Secured Overnight Financing Rate (SOFR) plus 1.36% to 1.61%, with an effective interest rate of 5.72% as of March 31, 2025[85] Foreign Currency and Market Risks - The Company does not employ any foreign currency hedges against operating expense exposure, which could increase costs if the U.S. dollar weakens against the Mexican Peso[89] - During the third quarter of fiscal year 2025, the Company utilized a derivative instrument to reduce exposure to foreign currency risk, which expired on March 31, 2025, without being utilized[90] - The Company believes that changes in market risk factors, such as interest rates and foreign exchange rates, will not cause material fluctuations in its results of operations or cash flows[88] Regulatory and Contractual Obligations - As of March 31, 2025, there have been no material changes to the Company's contractual obligations presented in the Annual Report for the year ended June 30, 2024[87] - The Company is subject to risks related to furniture product importation, including government regulations, tariffs, and fluctuations in the value of the U.S. dollar[88]

Financial Data and Key Metrics Changes - The third quarter net sales were $114 million, representing a growth of 6.3% compared to $107.2 million in the prior year quarter, marking the sixth consecutive quarter of year-over-year sales growth [29][10] - The adjusted operating margin was 7.3%, which is the second highest quarterly adjusted operating margin over the past seven years, reflecting an increase of 210 basis points from the prior year quarter [13][31] - Operating cash flow for the quarter was $12.3 million, with ending cash at $22.6 million, indicating a strong financial position [14][32] Business Line Data and Key Metrics Changes - Sales growth was driven by higher unit volumes and pricing from ocean freight surcharges, with significant success in new product introductions and share gains with large strategic accounts [10][29] - The company showcased 25 new product groups at the April Highpoint Market, expanding its Z-Clinr lineup and enhancing its soft seating portfolio [12][11] Market Data and Key Metrics Changes - Vietnam production supports roughly 55% of revenue, while Mexican operations support almost 40% of sales, with current tariffs impacting products sourced from Vietnam [17][30] - The company has seen a slowdown in incoming orders from retailers due to tariff announcements, with a healthy backlog of $78.3 million at the start of the fourth quarter [22][34] Company Strategy and Development Direction - The company remains focused on executing growth strategies, emphasizing new product introductions and enhancing customer experience as key components of its success [41][55] - The company is actively seeking alternative sourcing options beyond Vietnam and Mexico to mitigate tariff risks and maintain competitive pricing [62][63] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the potential impact of tariffs on margins, pricing, and supply chain design, particularly in light of the proposed U.S. reciprocal tariff [15][24] - The outlook for the industry is moderately pessimistic due to external challenges to consumer spending, with management prepared to navigate multiple demand scenarios [25][24] Other Important Information - The company recorded a $14.1 million non-cash impairment charge related to its facility in Mexicali, Mexico, due to changes in U.S. furniture demand [30][31] - The company has implemented modest tariff surcharges on new orders to partially offset the impact of tariffs, although these do not completely mitigate the 10% tariff on Vietnam imports [20][57] Q&A Session Summary Question: Changes in order patterns during the March quarter - Management noted a typical seasonal slowdown in March, but year-over-year growth remained consistent until the tariff announcement in early April, which led to a significant slowdown in orders [50][52] Question: Goals for new product contributions - Over half of current sales are derived from new products launched in the last couple of years, and the company remains committed to driving new product introductions regardless of external conditions [54][55] Question: Competitors' responses to tariff surcharges - Competitors have implemented their own surcharges, and the company's guidance assumes the current 10% Vietnam tariff remains intact, with minor dilution expected in operating margins [57][58] Question: Sourcing from alternative countries - The company is actively seeking suppliers in other Southeast Asian countries and is prepared to optimize its supply chain based on trade negotiations [62][63] Question: Impact of tariffs on gross margins - The magnitude of tariffs will determine their impact on margins, with near-term expectations of slight dilution, but efforts will be made to minimize the impact on consumers [66][67]

Financial Data and Key Metrics Changes - The third quarter net sales were $114 million, representing a growth of 6.3% compared to $107.2 million in the prior year quarter, marking the sixth consecutive quarter of year-over-year sales growth [18] - The adjusted operating margin was 7.3%, which is the second highest quarterly adjusted operating margin over the past seven years and a 210 basis point increase from the prior year quarter [20][21] - Operating cash flow for the quarter was $12.3 million, with ending cash of $22.6 million [21] Business Line Data and Key Metrics Changes - Sales growth was driven by higher unit volumes and pricing from ocean freight surcharges, with significant success from new product introductions and share gains with large strategic accounts [4][18] - The company continues to focus on new product introductions, with over half of current sales derived from products launched in the last couple of years [36] Market Data and Key Metrics Changes - The company has moved out of China for finished goods sourcing, with Vietnam supporting approximately 55% of revenue and Mexico nearly 40% [8][10] - The potential implementation of a 46% reciprocal tariff on Vietnam goods poses significant risks to the company and the overall U.S. furniture industry [10][12] Company Strategy and Development Direction - The company is focused on executing growth strategies, including expanding into new markets and enhancing customer experience through new product offerings [4][5] - There is a commitment to maintaining investments in product development, innovation, and marketing despite economic uncertainties [28][30] Management Comments on Operating Environment and Future Outlook - Management expressed concerns about short-term demand volatility and the mid-term outlook for the U.S. economy, anticipating challenges due to potential tariff impacts and consumer spending [14][15] - The company remains optimistic about its financial strength and ability to navigate market challenges while continuing to invest in growth [17][30] Other Important Information - The company has implemented modest tariff surcharges on some products to partially offset tariff costs, but anticipates an overall dilutive impact on gross margins [24][38] - The company is actively seeking alternative sourcing options to mitigate tariff risks and maintain competitive pricing [40][41] Q&A Session Summary Question: Changes in order patterns or delivered sales in March - Management noted that March typically sees lighter orders, but year-over-year growth remained consistent until a significant slowdown was observed following the April 2 tariff announcement [32][33] Question: Revenue derived from new products - Over half of current sales are from new products launched in the last couple of years, and the company will continue to prioritize new product introductions regardless of external conditions [35][36] Question: Tariff surcharges and competitor responses - Competitors have implemented their own surcharges, and the company's guidance assumes the current 10% Vietnam tariff remains intact [37][38] Question: Product sourcing and potential margin impacts - The company is exploring alternative suppliers in Southeast Asia and is prepared to optimize its supply chain based on future tariff negotiations [40][41]

Financial Data and Key Metrics Changes - The third quarter net sales were $114 million, representing a growth of 6.3% compared to $107.2 million in the prior year quarter, marking the sixth consecutive quarter of year-over-year sales growth [29][10] - The adjusted operating margin was 7.3%, which is the second highest quarterly adjusted operating margin over the past seven years, and reflects an increase of 210 basis points from the prior year quarter [13][31] - The company generated $12.3 million in operating cash flow and ended the quarter with $22.6 million in cash [14][32] Business Line Data and Key Metrics Changes - Sales growth was driven by higher unit volumes and pricing from ocean freight surcharges, with significant success in new product introductions and share gains with large strategic accounts [10][29] - The company showcased 25 new product groups at the April Highpoint Market, expanding its Z-Clinr lineup and introducing new case goods products [12][11] Market Data and Key Metrics Changes - Vietnam production supports approximately 55% of revenue, while Mexican operations account for nearly 40% of sales, with current tariff impacts primarily affecting Vietnam [17][30] - The company has seen a slowdown in incoming orders from retailers due to tariff announcements, with a healthy backlog of $78.3 million at the start of the fourth quarter [22][34] Company Strategy and Development Direction - The company remains focused on executing growth strategies, emphasizing new product introductions and enhancing customer experience as key components of its success [41][54] - The company is actively seeking alternative sourcing options beyond Vietnam and Mexico to mitigate tariff risks and maintain competitive pricing [62][63] Management's Comments on Operating Environment and Future Outlook - The management expressed concerns about the potential impact of tariffs on margins, pricing, and supply chain design, particularly in light of the proposed U.S. reciprocal tariff [15][24] - The outlook for the industry is moderately pessimistic due to external challenges to consumer spending, with management prepared to navigate multiple demand scenarios [25][24] Other Important Information - The company recorded a $14.1 million non-cash impairment charge related to its facility in Mexicali, Mexico, due to changes in U.S. furniture demand [30][31] - The company has implemented modest tariff surcharges on new orders to partially offset the impact of tariffs, although these do not completely offset the 10% tariff on Vietnam imports [20][57] Q&A Session Summary Question: Changes in order patterns during the March quarter - Management noted a typical seasonal slowdown in March, but year-over-year growth remained consistent until a significant slowdown in orders was observed following the April 2nd tariff announcement [50][52] Question: Goals for new product contributions to sales - Over half of current sales are derived from new products launched in the last couple of years, and the company remains committed to driving new product introductions regardless of external conditions [54][55] Question: Competitors' responses to tariff surcharges - Competitors have implemented varying surcharges based on their supply chains, and the company's guidance assumes the current 10% Vietnam tariff remains intact [57][58] Question: Sourcing from alternative countries - The company is actively seeking suppliers in other Southeast Asian countries and is prepared to optimize its supply chain based on trade negotiations [62][63] Question: Impact of tariffs on gross margins - Near-term tariffs are expected to be slightly dilutive to margins, with potential for greater impact if tariffs increase significantly [66][67]

Group 1: Earnings Performance - Flexsteel Industries reported quarterly earnings of $1.13 per share, exceeding the Zacks Consensus Estimate of $0.88 per share, and up from $0.67 per share a year ago, representing an earnings surprise of 28.41% [1] - The company posted revenues of $113.97 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.82% and increasing from $107.22 million year-over-year [2] Group 2: Stock Performance and Outlook - Flexsteel shares have declined approximately 39.8% since the beginning of the year, compared to a decline of 10.2% for the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $0.83 on revenues of $111.93 million, and for the current fiscal year, it is $3.40 on revenues of $436.3 million [7] Group 3: Industry Context - The Furniture industry, to which Flexsteel belongs, is currently ranked in the bottom 5% of over 250 Zacks industries, indicating a challenging environment [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Flexsteel's stock performance [5]

Financial Performance - Net sales for the third quarter were $114.0 million, an increase of 6.3% compared to $107.2 million in the prior year quarter, marking the sixth consecutive quarter of year-over-year sales growth [4]. - Adjusted operating income for the quarter was $8.3 million, or 7.3% of net sales, compared to $5.6 million, or 5.2% of net sales in the prior year quarter [4]. - The company reported a GAAP net loss of $3.7 million, or ($0.71) per diluted share, compared to net income of $1.8 million, or $0.33 per diluted share in the prior year quarter [13]. - Net sales for the three months ended March 31, 2025, increased to $113,972 thousand, up 6.5% from $107,219 thousand in the same period of 2024 [25]. - The company reported a net loss of $3,742 thousand for the three months ended March 31, 2025, compared to net income of $1,803 thousand in the same period of 2024 [25]. - Adjusted operating income for the three months ended March 31, 2025, was $8,266 thousand, compared to $5,609 thousand for the same period in 2024, reflecting a 47.3% increase [28]. - Adjusted net income for the nine months ended March 31, 2025, was $15,737 thousand, up 111.5% from $7,443 thousand in the same period of 2024 [29]. - Adjusted diluted earnings per share for the three months ended March 31, 2025, was $1.13, compared to $0.67 for the same period in 2024, marking a 68.7% increase [30]. Cash Flow and Working Capital - Operating cash flow generated in the quarter was $12.3 million, resulting in an ending cash position of $22.6 million [4]. - The company ended the quarter with working capital of $103.4 million and no line of credit borrowings [14]. - The company had cash and cash equivalents of $22,634 thousand at the end of the period, significantly up from $4,570 thousand at the end of the same period in 2024 [26]. - Operating activities generated net cash of $21,353 thousand for the nine months ended March 31, 2025, compared to $24,361 thousand for the same period in 2024 [26]. Margins and Expenses - Gross margin for the quarter was 22.2%, an increase of 50 basis points from 21.7% in the prior year quarter, driven by higher sales and favorable product mix [7]. - Selling, general and administrative (SG&A) expenses decreased to 15.0% of net sales from 16.5% in the prior year quarter, reflecting cost savings and higher sales leverage [8]. Future Outlook - For the fourth quarter fiscal 2025, the company expects sales growth of (2.0%) to 5.0% and an operating margin of 6.0% to 7.3% compared to the prior year quarter [15]. - The company plans to continue investing in new products and innovation while managing spending prudently in response to changing consumer demand [5]. Impairment Charges - The company recorded a pre-tax impairment charge of $14.1 million related to its leased facility in Mexicali, Mexico, impacting GAAP operating results [10]. - The company incurred a right-of-use asset impairment of $14,079 thousand for the nine months ended March 31, 2025 [25]. Tax Rate - The effective tax rate for the three and nine months ended March 31, 2025, was 24.6%, compared to 30.0% and 30.1% for the same periods in 2024 [31].

Core Viewpoint - Growth investors are focused on stocks with above-average financial growth, but identifying such stocks can be challenging due to associated risks and volatility [1] Group 1: Growth Stock Identification - The Zacks Growth Style Score system aids in identifying promising growth stocks by analyzing real growth prospects beyond traditional metrics [2] - Flexsteel Industries (FLXS) is highlighted as a recommended stock with a favorable Growth Score and a top Zacks Rank [2] Group 2: Earnings Growth - Earnings growth is crucial for investors, with double-digit growth being a strong indicator of future stock price gains [4] - Flexsteel's historical EPS growth rate is 16%, but projected EPS growth for this year is significantly higher at 67.3%, surpassing the industry average of 37.7% [5] Group 3: Cash Flow Growth - High cash flow growth is essential for growth-oriented companies, allowing them to fund new projects without external financing [6] - Flexsteel's year-over-year cash flow growth is 68.9%, compared to an industry average of -20.9% [6] - The company's annualized cash flow growth rate over the past 3-5 years is 8%, while the industry average is 2.9% [7] Group 4: Earnings Estimate Revisions - Positive trends in earnings estimate revisions correlate strongly with near-term stock price movements [8] - Flexsteel's current-year earnings estimates have been revised upward, with the Zacks Consensus Estimate increasing by 8.6% over the past month [9] Group 5: Conclusion - Flexsteel has achieved a Growth Score of A and a Zacks Rank 1 due to positive earnings estimate revisions, indicating it is a potential outperformer for growth investors [11]