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Harvey Norman Holdings Ltd (AU:HVN)
ASX:HVN

Harvey Norman Holdings Ltd (HVN) AI Stock Analysis

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AU

Harvey Norman Holdings Ltd

(Sydney:HVN)

Rating:73Outperform
Price Target:
AU$6.00
▲(9.89%Upside)
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 (HVN) vs. iShares MSCI Australia ETF (EWA)

Harvey Norman Holdings Ltd Business Overview & Revenue Model

Company DescriptionHarvey 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 MoneyHarvey Norman Holdings Ltd generates revenue primarily through retail sales of a wide variety of consumer goods, such as electronics, home appliances, furniture, and bedding. The company's revenue model is bolstered by its franchise system, where independent franchisees operate stores under the Harvey Norman brand, paying franchise fees and contributing to the overall revenue. Additionally, the company benefits from property investments, earning rental income from leasing commercial premises to franchisees and other third-party tenants. The company's earnings are further enhanced by its strategic partnerships with leading manufacturers and suppliers, enabling it to offer a competitive and diverse product range while optimizing its supply chain efficiencies. Online sales also form a significant part of Harvey Norman's revenue stream, driven by its robust e-commerce platform that complements its physical store presence.

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. The company faces challenges in maintaining profit margins and managing increasing leverage. While revenue growth is a concern, effective cost management and cash flow efficiency remain the company's strengths.
Income Statement
72
Positive
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
68
Positive
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
75
Positive
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
TTMJun 2024Jun 2023Jun 2022Jun 2021Jun 2020
Income StatementTotal Revenue
2.82B3.92B3.98B4.14B4.15B3.38B
Gross Profit
868.88M1.99B1.94B2.12B2.16B1.67B
EBIT
-485.09M361.21M777.71M970.32M1.07B675.90M
EBITDA
755.74M837.26M1.02B1.34B1.37B862.84M
Net Income Common Stockholders
431.84M352.45M539.52M811.53M841.41M480.54M
Balance SheetCash, Cash Equivalents and Short-Term Investments
314.23M273.47M218.75M248.80M305.71M343.43M
Total Assets
8.25B7.93B7.67B7.25B6.67B5.83B
Total Debt
2.27B2.28B2.18B1.90B1.74B1.47B
Net Debt
1.96B2.01B1.96B1.66B1.47B1.16B
Total Liabilities
3.54B3.39B3.21B2.95B2.78B2.35B
Stockholders Equity
4.67B4.50B4.43B4.26B3.86B3.45B
Cash FlowFree Cash Flow
417.29M494.37M492.60M502.38M443.57M963.06M
Operating Cash Flow
637.32M686.53M680.26M597.30M543.87M1.06B
Investing Cash Flow
-288.44M-301.18M-333.48M-178.79M-254.12M-136.96M
Financing Cash Flow
-376.82M-334.25M-379.07M-432.87M-335.47M-811.37M

Harvey Norman Holdings Ltd Technical Analysis

Technical Analysis Sentiment
Positive
Last Price5.46
Price Trends
50DMA
5.17
Positive
100DMA
5.05
Positive
200DMA
4.82
Positive
Market Momentum
MACD
0.06
Negative
RSI
60.93
Neutral
STOCH
80.39
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 5.46 is above the 20-day moving average (MA) of 5.36, above the 50-day MA of 5.17, and above the 200-day MA of 4.82, indicating a bullish trend. The MACD of 0.06 indicates Negative momentum. The RSI at 60.93 is Neutral, neither overbought nor oversold. The STOCH value of 80.39 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

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
AUHVN
73
Outperform
$6.80B15.759.58%4.48%1.77%15.57%
62
Neutral
$6.88B11.322.95%3.87%2.70%-24.57%
DE30M
€673.19M21.548.55%5.81%
AUJBH
75
Outperform
AU$11.92B25.9129.07%3.24%6.21%0.20%
AUBLX
75
Outperform
AU$839.17M28.0817.54%2.15%5.33%-4.25%
AUSUL
73
Outperform
AU$3.25B14.3417.52%4.85%2.56%-13.62%
AUPMV
71
Outperform
AU$3.28B16.5714.01%6.57%-27.48%-27.96%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
AU:HVN
Harvey Norman Holdings Ltd
5.46
1.22
28.86%
DE:30M
Myer Holdings Limited
0.36
0.00
0.00%
AU:JBH
JB Hi-Fi Limited
109.02
51.73
90.29%
AU:SUL
Super Retail Group Limited
14.22
1.93
15.70%
AU:PMV
Premier Investments Limited
20.25
-0.91
-4.30%
AU:BLX
Beacon Lighting Group Ltd
3.67
1.32
56.17%

Harvey Norman Holdings Ltd Corporate Events

Harvey Norman Reports Strong Half-Year Results
Feb 28, 2025

Harvey Norman Holdings Ltd has released its half-year results for the period ending December 31, 2024, highlighting strong performance across its integrated retail, franchise, property, and digital segments. The announcement underscores the company’s robust sales revenue and strategic positioning in both domestic and international markets, indicating positive implications for stakeholders and reinforcing its competitive standing in the industry.

Harvey Norman Reports Strong Profit Growth Amid Expansion
Feb 28, 2025

Harvey Norman Holdings Ltd reported a significant increase in profit before tax (PBT) for the first half of 2025, reaching $400.29 million, a 41.2% rise from the previous year. The company’s total system sales revenue amounted to $4.83 billion, with franchisee sales showing notable growth across several months. The strategic expansion into England has incurred substantial establishment costs, but the company continues to see positive sales trends in its key product categories.

Harvey Norman Holdings Announces Half-Year Results and Dividend Schedule
Feb 28, 2025

Harvey Norman Holdings Ltd has announced its half-year results for the period ending December 2024. The company has scheduled key dates for the announcement of its interim and final dividends for 2025, reflecting its ongoing commitment to shareholder returns. These announcements are crucial for stakeholders as they provide insights into the company’s financial health and future dividend payments, which are important indicators of its market position and operational performance.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.