The home improvement market is growing amid increasing demand for customization, rapid urbanization, and the popularity of the D-I-Y (Do it Yourself) concept. So, it could be wise to add quality home improvement stocks Acuity Brands, Inc. (AYI), National Presto Industries, Inc. (NPK), and Bassett Furniture Industries, Incorporated (BSET) to one’s portfolio now.
Technology and innovation are transforming the home remodeling sector, providing homeowners with an extensive range of new tools and materials to assist them in building the houses of their dreams.
DIY house remodeling and renovations are expected to be in high demand due to the increased availability of DIY home improvement items and the growing popularity of simple add-ons. The global home improvement market is predicted to increase at a CAGR of 6.7% to reach $575.5 billion by the end of 2030.
In addition, the Inflation Reduction Act may encourage households to embark on remodeling projects by providing a variety of tax credits for installing solar panels and other energy-efficient items.
The Act’s updated and expanded 25C provision raised the credit range for eligible energy-efficient improvements done during the year from 10% to 30% of the expenses, up to $3,200.
Let’s delve deeper into the fundamentals of the stocks mentioned above.
Acuity Brands, Inc. (AYI)
AYI provides lighting and building management solutions in North America and internationally. The company operates through two segments: Acuity Brands Lighting and Lighting Controls (ABL) and Intelligent Spaces Group (ISG).
AYI’s trailing-12-month levered FCF margin of 8.89% is 71.2% higher than the industry average of 5.20%. Its trailing-12-month ROTA of 11.21% is 121% higher than the industry average of 5.07%.
AYI has paid dividends for three consecutive years. AYI’s four-year average dividend yield is 0.36%. Its forward annual dividend of $0.52 translates to a 0.34% yield.
AYI’s net sales increased 3.8% year-over-year to $943.60 million in the fiscal 2023 second quarter that ended February 28. Its adjusted operating profit increased 7.7% from the year-ago value to $132.10 million. The company’s adjusted net income increased 8.8% from the prior-year period to $99 million, while adjusted EPS increased 19.1% year-over-year to $3.06.
The consensus revenue estimate of $4.09 billion for the year ending August 2023 represents a 2.1% increase year-over-year. Its EPS is expected to grow at 9.1% year-over-year to $13.99 for the same period. AYI’s shares have gained marginally over the past month to close the last trading session at $154.49.
AYI’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
AYI has an A grade for Value and Quality. It is ranked first among 56 stocks in the B-rated Home Improvement & Goods industry. Click here for the additional POWR Ratings for Growth, Stability, Sentiment, and Momentum for AYI.
National Presto Industries, Inc. (NPK)
NPK provides housewares and small electric appliances, defense, and safety products in North America.
NPK’s trailing-12-month levered FCF margin of 6.84% is 31.7% higher than the industry average of 5.20%. Its trailing-12-month ROTA of 6.73% is 32.8% higher than the industry average of 5.07%.
NPK has paid dividends for 20 consecutive years. NPK’s four-year average dividend yield is 7.4%. Its forward annual dividend of $1 translates to a 1.32% yield.
NPK’s net sales came in at $80.41 million for the first quarter that ended April 2, 2023, up 32.4% year-over-year. The company’s net earnings increased 204.6% year-over-year to $8.87 million, while its EPS came in at $1.25, representing a 204.9% increase year-over-year.
Analysts expect NPK’s revenue to increase 50.6% year-over-year to $150.15 million in 2023. Its EPS is expected to grow 17.6% to $0.87 in 2023. The stock has gained 15.5% over the past year to close its last trading session at $75.80.
It’s no surprise that NPK has an overall B rating, equating to a Buy in our POWR Ratings system. It has a B grade for Growth, Value and Quality. It is ranked #3 in the same industry.
Beyond what is stated above, we’ve also rated NPK for Stability, Momentum, and Sentiment. Get all NPK ratings here.
Bassett Furniture Industries, Incorporated (BSET)
BSET develops, manufactures, sources, sells, and distributes home furnishings internationally. It operates in three segments: Wholesale; Retail company-owned stores; and Logistical services. The company operates a network of more than 63 company-owned and 34 licensee-owned stores.
On May 15, 2023, BSET announced an agreement with Acuative to meet its expanding demand for efficient, cutting-edge networking communications and security solutions. This enables BSET IT team to concentrate on other activities and upcoming technology that will benefit customers.
BSET’s trailing-12-month net income margin of 12.88% is 197.1% higher than the industry average of 4.33%. Its trailing-12-month gross profit margin of 52.19% is 48% higher than the industry average of 35.27%.
Over the last three years, BSET’s dividend payouts have grown at a 19.5% CAGR. While BSET’s four-year average dividend yield is 6.10%, the company’s annual dividend of $0.64 yields 4.67% at the current price level.
BSET total current liabilities came in at $90.58 million for the period that ended February 25, 2023, compared to $100.83 million for the period that ended November 26, 2022. Also, its total long liabilities came in at $107.18 million, compared to $109.84 million for the same period.
Street expects BSET’s revenue to increase 3.4% year-over-year to $450.53 million in 2024. Its EPS is expected to increase 60.9% year-over-year to $1.92 for the same period. It surpassed EPS estimates in three of four trailing quarters. BSET’s shares have lost marginally intraday to close the last trading session at $13.70.
BSET’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It is ranked #2 in the same industry. It has an A grade for Sentiment and a B for Value and Quality. To see additional BSET’s rating for Momentum, Stability, and Growth, click here.
The Bear Market is NOT Over…
That is why you need to discover this timely presentation with a trading plan and top picks from 40 year investment veteran Steve Reitmeister:
REVISED: 2023 Stock Market Outlook >
AYI shares were trading at $155.25 per share on Friday afternoon, up $0.76 (+0.49%). Year-to-date, AYI has declined -6.11%, versus a 10.15% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
The post Top 3 Home Improvement Stocks of Their Industry appeared first on StockNews.com