Harvey Norman Holdings Ltd (HVN) AI Stock Analysis

• Market Cap: $7.49B
• Dividend Yield: 3.95%
• Average Volume (3M): 1.21M
• Price to Earnings (P/E): 17.3
• Beta (1Y): 1.07
• Revenue Growth: 1.77%
• EPS Growth: 15.57%
• Country: AU
• Employees: 6,500
• Sector: Consumer Cyclical
• Sector Strength: 70
• Industry: Department Stores
• EPS (TTM): 0.17
• Shares Outstanding: 1,246,006,700
• 10 Day Avg. Volume: 1,060,939
• 30 Day Avg. Volume: 1,209,168
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.05
• Enterprise Value/Revenue: 2.34
• Enterprise Value/Gross Profit: 5.59
• Enterprise Value/Ebitda: 10.36
• 1Y Price Target: $5.58
• Price Target Upside: -9.53% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 4

• Rating: 73 Outperform
• Price Target: AU$6.00 ▼(-2.76% Downside)

The overall stock score for Harvey Norman Holdings Ltd is primarily influenced by its strong financial stability and positive technical indicators. While the company faces challenges in profit margins and leverage, its effective cost management and robust cash flow generation are significant strengths. The fair valuation and attractive dividend yield further enhance the stock's investment appeal.

Positive Factors

Profit Growth

The company's 2H24 profit before tax increased by 5.0% year over year, which was 8% above the Goldman Sachs estimate.

Negative Factors

Market Competition

The company is experiencing market share loss in Australia due to higher competition in the electronics and furniture industry.

Sales Performance

The New Zealand retail segment delivered a -9.0% comparable sales decline in the second half of FY24.

Harvey Norman Holdings Ltd Business Overview & Revenue Model

Company Description

Harvey Norman Holdings Limited engages in the integrated retail, franchise, property, and digital system businesses. It franchises and sells products in various categories, including electrical goods, furniture, computerized communications, bedding and Manchester, kitchen and small appliances, bathroom and tiles, and carpets and floorings. As of June 30, 2022, the company operated 195 franchised complexes under the Harvey Norman, Domayne, and Joyce Mayne brands in Australia; and 109 company-operated stores under the Harvey Norman brand in New Zealand, Singapore, Malaysia, Slovenia, Croatia, Ireland, and Northern Ireland. It is also involved in the property investment and media placement activities; acts as a lessor of premises to Harvey Norman, Domayne, and Joyce Mayne franchisees and other third parties, as well as retail properties; development and sale of properties; and provision of consumer finance and other commercial loans and advances. The company was founded in 1982 and is based in Homebush West, Australia.

How the Company Makes Money

Harvey Norman Holdings Ltd generates revenue primarily through the sale of consumer goods across its various retail segments. The company operates a unique business model that includes both company-operated and franchised stores. Franchisees pay a combination of franchise fees and rent, contributing to the company's income. Additionally, Harvey Norman benefits from the sale of its real estate portfolio, as the company owns many of its store properties, providing rental income and opportunities for capital appreciation. The company's earnings are further supplemented by strategic partnerships with major electronics, furniture, and technology brands, which enable it to offer a wide range of products to its customers.

Harvey Norman Holdings Ltd Financial Statement Overview

Summary

Harvey Norman Holdings Ltd demonstrates overall financial stability with strong cash flow generation and a healthy equity base. However, challenges include maintaining profit margins and managing increasing leverage. Revenue growth is a concern, but effective cost management and cash flow efficiency remain strengths.

Income Statement

Harvey Norman Holdings Ltd has demonstrated a stable revenue base with a minor decline from the previous year, but overall, it has been consistent over the years. The gross profit margin is strong at approximately 46.5%, indicating good control over the cost of goods sold. The net profit margin decreased from last year to 8.98%, reflecting challenges in maintaining bottom-line profitability. The EBIT and EBITDA margins are solid, but there is a noticeable decrease in EBIT margin from the previous year, which might suggest increased operating expenses or lower revenue efficiency.

Balance Sheet

The company maintains a healthy equity ratio of around 56.8%, suggesting a strong foundation with moderate reliance on debt. However, the debt-to-equity ratio has increased slightly over the years to 0.51, indicating a growing leverage which could pose risks if not managed properly. The return on equity (ROE) has decreased to 7.83%, suggesting reduced profitability relative to shareholders' equity.

Cash Flow

Operating cash flow remains robust, and free cash flow is positive, indicating good internal cash generation capability. The free cash flow to net income ratio is strong, showing effective conversion of income into cash. However, the growth in free cash flow has been minimal, indicating stagnation in cash flow growth despite steady operating cash inflow.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.92B	3.98B	4.14B	4.15B	2.29B
Gross Profit	1.99B	1.94B	2.12B	2.16B	1.67B
EBITDA	837.26M	1.08B	1.39B	1.37B	904.13M
Net Income	352.45M	539.52M	811.53M	841.41M	480.54M
Balance Sheet
Total Assets	7.93B	7.67B	7.25B	6.67B	5.83B
Cash, Cash Equivalents and Short-Term Investments	273.47M	218.75M	248.80M	305.71M	343.43M
Total Debt	2.28B	2.18B	1.90B	1.74B	1.47B
Total Liabilities	3.39B	3.21B	2.95B	2.78B	2.35B
Stockholders Equity	4.50B	4.43B	4.26B	3.86B	3.45B
Cash Flow
Free Cash Flow	494.37M	492.60M	502.38M	443.57M	963.06M
Operating Cash Flow	686.53M	680.26M	597.30M	543.87M	1.06B
Investing Cash Flow	-301.18M	-333.48M	-178.79M	-254.12M	-136.96M
Financing Cash Flow	-334.25M	-379.07M	-432.87M	-335.47M	-811.37M

Harvey Norman Holdings Ltd Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 6.17
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:HVN, the sentiment is Positive. The current price of 6.17 is above the 20-day moving average (MA) of 5.90, above the 50-day MA of 5.61, and above the 200-day MA of 5.09, indicating a bullish trend. The MACD of 0.13 indicates Negative momentum. The RSI at 75.56 is Negative, neither overbought nor oversold. The STOCH value of 82.59 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AU:HVN.

Harvey Norman Holdings Ltd Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HVN	73 Outperform	$7.49B	17.34	9.58%	3.95%	1.77%	15.57%
Sector *	61 Neutral	$17.42B	12.39	-5.32%	3.12%	1.53%	-15.37%
30M	―	€623.94M	19.88	8.55%	―	―	―
SUL	77 Outperform	AU$3.69B	16.27	16.46%	7.20%	2.56%	-13.62%
JBH	75 Outperform	AU$12.97B	28.05	29.12%	2.07%	10.03%	5.38%
PMV	73 Outperform	AU$3.52B	17.78	14.01%	4.50%	-27.48%	-27.96%
BLX	72 Outperform	AU$793.44M	26.55	17.54%	2.28%	5.33%	-4.25%

Harvey Norman Holdings Ltd Corporate Events

Harvey Norman Announces Director’s Shareholding Change

Harvey Norman Holdings Ltd announced a change in the director’s interest for Gerald Harvey, with a significant transaction involving the disposal and acquisition of fully paid ordinary shares. This change in shareholding could have implications for the company’s governance and investor confidence, as it reflects a shift in the director’s financial stake in the company.

The most recent analyst rating on (AU:HVN) stock is a Buy with a A$5.85 price target. To see the full list of analyst forecasts on Harvey Norman Holdings Ltd stock, see the AU:HVN Stock Forecast page.