1. Is the company undervalued?

*Please note I’m backing out operating leases and customer deposits in the calculation of Enterprise value here *

$HVT is a cyclical stock that’s inexplicably performing well in this environment, with sales up 5.4% YOY and margins expanding in the latest quarter. Having said that the company is expecting a slowdown next year in both sales and earnings. Nevertheless the stock is trading at bargain basement prices with effectively zero solvency concerns. Furthermore $HVT has ample runway left to keep opening new stores while maintaining a shareholder friendly capital return policy. To quote Monish Prabrai $HVT seems like a “Heads I win, tails I don’t lose much” thesis.

Link to full write-up here: