Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, with Flexsteel Industries identified as a promising candidate due to its strong growth metrics and favorable rankings [1][2]. Group 1: Earnings Growth - Flexsteel's historical EPS growth rate stands at 16%, but projected EPS growth for this year is expected to be 67.3%, significantly surpassing the industry average of 40.5% [4]. Group 2: Cash Flow Growth - The year-over-year cash flow growth for Flexsteel is currently at 68.9%, which is notably higher than the industry average of -20.9% [5]. - Over the past 3-5 years, Flexsteel's annualized cash flow growth rate has been 8%, compared to the industry average of -1% [6]. Group 3: Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for Flexsteel, with the Zacks Consensus Estimate for the current year increasing by 8.6% over the past month [7]. Group 4: Overall Positioning - Flexsteel has achieved a Growth Score of A and holds a Zacks Rank 1, indicating strong buy potential, positioning it well for outperformance in the growth stock category [9].

Financial Performance - Net sales for the quarter ended December 31, 2024, were $108.5 million, an increase of 8.4% compared to $100.1 million in the prior year quarter[54]. - Gross margin for the quarter ended December 31, 2024, was 21.0%, a decrease of 90 basis points from 21.9% in the prior year quarter[55]. - Selling, general and administrative expenses decreased to $16.1 million, or 14.9% of net sales, down from $17.4 million, or 17.3% of net sales in the prior year quarter[56]. - Net income for the quarter ended December 31, 2024, was $9.1 million, or $1.62 per diluted share, compared to $3.1 million, or $0.57 per diluted share in the prior year quarter[58]. - For the six months ended December 31, 2024, net sales were $212.5 million, a 9.1% increase from $194.7 million in the prior year[60]. - Gross margin for the six months ended December 31, 2024, was 21.3%, an increase of 60 basis points from 20.7% in the prior year[61]. - Net cash provided by operating activities for the six months ended December 31, 2024, was $9.1 million, down from $17.2 million in the prior year[68]. - The company recorded a pre-tax gain of $5.0 million from the sale of its Dublin, Georgia facility during the quarter ended December 31, 2024[57]. Backlog and Inventory - Home furnishings backlog increased by 40.0% to $77 million as of December 31, 2024, compared to $55 million in the prior year quarter[55]. Foreign Currency and Tariff Risks - The company is assessing options to mitigate potential impacts from a 25% tariff on products from Mexico, effective February 4, 2025[59]. - The Company did not have sales during the quarters ended December 31, 2024 and 2023, but incurred purchases and expenses in foreign currencies, primarily the Mexican Peso[79]. - A negative shift in the value of the U.S. dollar against the Peso could increase the cost of manufactured products[79]. - The Company began using a derivative instrument in Q3 of fiscal year 2025 to reduce exposure to foreign currency risk from changes in the Peso's exchange rate[79]. - The Company does not employ any foreign currency hedges against its exposure to the Mexican Peso[79]. Market and Operational Risks - Political issues and shipping disruptions can adversely affect the ability to import furniture products[78]. - The Company faces risks related to government regulations, duties, taxes, and tariffs on imports[78]. - Significant fluctuations in the value of the U.S. dollar against foreign currencies could interrupt supply and decrease earnings[78]. - The Company has certain assets and liabilities related to manufacturing operations denominated in Pesos, including a VAT receivable[79]. - The primary market risk exposure for the Company is changes in interest rates[80]. Debt and Credit - As of December 31, 2024, the Company had no outstanding borrowings on its line of credit, exclusive of fees and letters of credit[80].

Core Viewpoint - Flexsteel Industries (FLXS) is experiencing solid improvement in earnings estimates, which is likely to positively impact its stock price [1][2]. Earnings Estimate Revisions - Current quarter earnings are expected to be $0.88 per share, reflecting a +31.34% change from the previous year [4]. - The Zacks Consensus Estimate for the current quarter has increased by 8.64% due to one upward revision and no negative revisions in the last 30 days [4]. - For the full year, the earnings estimate is $3.53 per share, indicating a +67.3% change from the previous year [5]. - The consensus estimate for the full year has risen by 8.62%, supported by one upward revision and no negative revisions [5]. Zacks Rank and Performance - Flexsteel has achieved a Zacks Rank 1 (Strong Buy), indicating strong potential for outperformance based on earnings estimate revisions [6]. - Historically, Zacks 1 Ranked stocks have generated an average annual return of +25% since 2008 [3][6]. - Stocks with Zacks Rank 1 and 2 significantly outperform the S&P 500 [6]. Stock Performance - Flexsteel shares have increased by 22.5% over the past four weeks, reflecting investor confidence in its earnings growth prospects [7].

Core Viewpoint - Flexsteel Industries (FLXS) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system emphasizes the correlation between changes in earnings estimates and stock price movements, making it a valuable tool for investors [2][4]. - Flexsteel's earnings per share (EPS) for the fiscal year ending June 2025 is projected to be $3.53, reflecting a year-over-year increase of 67.3% [8]. - Over the past three months, the Zacks Consensus Estimate for Flexsteel has risen by 8.6%, indicating a positive trend in earnings expectations [8]. Investment Implications - The upgrade to Zacks Rank 1 suggests that Flexsteel is positioned among the top 5% of stocks covered by Zacks, which typically leads to increased buying pressure and potential stock price appreciation [10]. - Rising earnings estimates and the corresponding rating upgrade signal an improvement in Flexsteel's underlying business, which should encourage investor confidence and drive the stock higher [5][10]. Zacks Rank System Overview - The Zacks Rank system categorizes stocks into five groups based on earnings estimates, with a strong historical performance of Zacks Rank 1 stocks averaging an annual return of +25% since 1988 [7]. - The system maintains a balanced distribution of ratings, ensuring that only the top 20% of stocks receive favorable ratings, which enhances the reliability of the rankings [9].

Group 1 - The investment strategy focuses on long-only investment, evaluating companies from an operational and buy-and-hold perspective, rather than market-driven dynamics [1] - The articles emphasize understanding the long-term earnings power of companies and the competitive dynamics within their industries [1] - The majority of recommendations will be holds, indicating a cautious approach to investment opportunities [1] Group 2 - A very small fraction of companies are considered a buy at any given time, highlighting a selective investment strategy [1] - Hold articles are intended to provide valuable information for future investors and introduce skepticism in a generally bullish market [1]

Core Insights - Flexsteel Industries, Inc. reported strong second-quarter fiscal 2025 results, with earnings and net sales exceeding expectations and showing year-over-year growth [1][4] Financial Performance - Adjusted earnings per share (EPS) reached 95 cents, surpassing the Zacks Consensus Estimate of 74 cents, and increased from 57 cents in the prior-year quarter [4] - Net sales amounted to $108.5 million, exceeding the consensus estimate of $105 million by 3.7% and reflecting an 8.4% increase from the previous year [4] - Home furnishings sales through retail stores rose by 10.3% year-over-year, contributing to the overall sales growth [4] Operational Highlights - Flexsteel achieved its fifth consecutive quarter of positive sales growth, driven by strong performance in core markets and new initiatives [2] - The company expanded its operating margin by 150 basis points year-over-year to 6.1% [7] - Gross margin contracted by 90 basis points to 21% due to higher ocean freight costs, although selling, general, and administrative expenses as a percentage of net sales decreased by 240 basis points to 14.9% [6] Cash Flow and Debt Management - The company generated positive free cash flow, allowing it to pay off remaining bank debt and accumulate cash, with cash and cash equivalents increasing to $11.8 million from $4.8 million at the end of fiscal 2024 [2][8] Future Guidance - For the third quarter of fiscal 2025, Flexsteel expects net sales between $110 million and $115 million, indicating a growth of 3% to 7% compared to the prior year [9] - The company raised its fiscal 2025 net sales guidance to a range of $435 million to $445 million, up from the previous expectation of $427 million to $440 million, reflecting a projected growth of 5.5% to 8% year-over-year [9] Market Reaction - Following the positive earnings report, shares of Flexsteel increased by 6.9% in after-hours trading, driven by favorable investor sentiment [3]

Flexsteel Industries (FLXS) Q2 2025 Earnings Call February 04, 2025 09:00 AM ET Company Participants Michael Ressler - CFODerek Schmidt - President & CEO Conference Call Participants Anthony Lebiedzinski - Senior Equity Research Analyst Operator Good morning, and welcome to the Flexsteel Industries Second Quarter Fiscal 2025 Earnings Conference Call. All participants will be in a listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Mike Ressler, Chief F ...

Flexsteel Industries, Inc. Reports Strong Fiscal Second Quarter 2025 Results Mr. Schmidt concludes, "In addition to our improved sales outlook, we were also anticipating continued improvement in our operating margin and free cash flow for the remainder of the fiscal year, but the executive orders announced this weekend to implement 25% tariffs on Mexico and Canada introduced significant uncertainty and could materially change our business outlook given our sizable operations in Mexico. The current situation ...

Dwindling consumer confidence and economic uncertainty are marring prospects of the Zacks Furniture industry. Despite industry-wide headwinds in the furniture and home furnishings sector, including reduced home-related spending due to higher mortgage rates and housing affordability challenges, companies like La-Z-Boy Incorporated (LZB) , Sleep Number Corporation (SNBR) and Flexsteel Industries, Inc. (FLXS) are capitalizing on this period by strategically investing in technological advancements, product inno ...

The Consumer Discretionary group has plenty of great stocks, but investors should always be looking for companies that are outperforming their peers. Flexsteel Industries (FLXS) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? Let's take a closer look at the stock's year-to-date performance to find out.Flexsteel Industries is a member of our Consumer Discretionary group, which includes 272 different companies and curren ...