On Wednesday, Benchmark analyst Reuben Garner updated the firm's outlook on HNI Corp (NYSE:HNI), increasing the price target to $57 from $54, while reiterating a Buy rating on the stock. The adjustment follows HNI Corporation's recent announcement of the planned first half of 2025 closure of its Hickory, NC, manufacturing plant. This strategic move is part of the company's ongoing integration of Kimball International Inc. (KII) and efforts to optimize its operational footprint.
The closure is expected to save the company approximately $11 million annually. Additionally, HNI Corp has identified an extra $4 million in procurement savings. These combined savings have raised the total projected synergies from the KII acquisition to $50 million, doubling the original estimates set just a year ago.
Despite minimal impact on the financial year 2024, the newfound savings have led Benchmark to revise its earnings per share (EPS) estimate for the following year upwards to $3.60, from the previous estimate of $3.40. The analyst highlighted that over 90% of the forecasted earnings growth for the financial year 2025 is driven by factors within the company's control, suggesting that the estimates might be conservative. If HNI Corp achieves the mid-single-digit top-line growth that is being projected, there could be further upside to these figures.
InvestingPro Insights
As HNI Corp (NYSE:HNI) strategizes for future growth, recent data from InvestingPro provides additional context for investors considering the company's stock. With a market capitalization of $2.13 billion and a price-to-earnings (P/E) ratio of 16.29 over the last twelve months as of Q1 2024, HNI appears to be valued by the market for its earnings potential. This is further supported by a robust revenue growth of 12.09% over the same period. The company's commitment to shareholder returns is evident in its impressive track record of maintaining dividend payments for 54 consecutive years, with a current dividend yield of 2.93%.
InvestingPro Tips highlight that HNI has raised its dividend for 13 consecutive years and is expected to grow net income this year. These factors, along with a high return of 77.7% over the past year, underscore the company's financial health and potential for long-term investor returns. For those interested in additional insights, InvestingPro offers more tips for HNI, with the opportunity to apply a special coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
With analysts predicting profitability for the current year and a fair value estimate of $56 by analysts and $46.3 by InvestingPro, HNI's strategic actions, such as the closure of its Hickory, NC, manufacturing plant, seem to align with the company's broader financial narrative. These insights and metrics provide a richer understanding of HNI’s market position and future prospects.
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