Stifel Canada has initiated coverage on Leon's Furniture (LNF: CN) (OTC: LEFUF), setting a Hold rating with a price target of C$30.00.
The retailer, known for its home furniture, appliances, electronics, and mattresses, operates under three main banners: Leon's, The Brick, and Appliance Canada, with a total of 300 stores.
Despite its position as a leading retailer in Canada, Leon's Furniture has experienced only modest revenue growth over the past seven years and appears to have lost market share since 2017.
The company's system sales have grown at a compound annual growth rate (CAGR) of 2.0%, which is below the industry's CAGR of 2.5%.
In an effort to reinvigorate its stock performance, Leon's Furniture announced in May 2023 its plans to establish a Real Estate Investment Trust (REIT) to leverage the value of its extensive real estate holdings. This strategic move has seen Leon's shares reach a record high, outperforming the TSX Composite Index year-to-date.
The price target of C$30.00 by Stifel is based on an average of three valuation methods: 8 times the projected 2025 EBITDA, 14 times the projected 2025 earnings per share (EPS), and a discounted cash flow (DCF) analysis.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.