Culp (CULP) AI Stock Analysis

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Culp

(NYSE:CULP)

49Neutral

Culp's overall stock score is undermined by weak financial performance characterized by declining revenues and net losses. Despite some technical stability and improvements from restructuring, valuation issues and sales declines weigh heavily on the score.

Culp (CULP) vs. S&P 500 (SPY)

Market Cap

$51.49M

Dividend YieldN/A

Average Volume (3M)34.79K

Price to Earnings (P/E)―

Beta (1Y)0.60

Revenue Growth-9.80%

EPS Growth-59.08%

CountryUS

Employees1,000

SectorConsumer Cyclical

Sector Strength55

IndustryApparel - Manufacturers

Share Statistics

EPS (TTM)-1.75

Shares Outstanding12,559,129

10 Day Avg. Volume29,171

30 Day Avg. Volume34,791

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.32

Price to Cash Flow (P/CF)-2.50

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Culp Business Overview & Revenue Model

Company DescriptionCulp, Inc. (CULP) is a leading U.S.-based manufacturer and marketer in the home furnishings industry, particularly known for its innovative and high-quality fabrics. The company operates primarily in two segments: mattress fabrics and upholstery fabrics. Culp's mattress fabrics division manufactures and sells fabrics used in the production of mattresses, while its upholstery fabrics division provides a wide range of decorative fabrics for furniture applications. With a strong emphasis on design and product development, Culp serves a diverse customer base that includes furniture and bedding manufacturers across the globe.

How the Company Makes MoneyCulp makes money primarily through the sale of its fabrics and related products to manufacturers in the furniture and bedding industries. Its revenue model is based on manufacturing and distributing a variety of textile products, including woven and knitted fabrics, which are sold to mattress and furniture manufacturers. The company's key revenue streams include domestic and international sales of these products, leveraging its manufacturing capabilities and design expertise. Significant partnerships with furniture and mattress manufacturers help drive sales, as these relationships ensure a steady demand for Culp's innovative and tailored fabric solutions. Additionally, the company's focus on operational efficiency and product innovation supports its competitive position and contributes to its earnings.

Culp Financial Statement Overview

Summary

Culp's financial performance is weak, with declining revenues, net losses, and negative cash flows. The balance sheet is stable with low leverage, but profitability and cash flow issues are concerning.

Income Statement

Negative

The income statement shows a concerning trend with declining revenues and persistent net losses over the past years. The TTM period reflects a net profit margin of -10.24%, indicating ongoing profitability challenges. The gross profit margin has also declined, suggesting cost management issues. Despite these challenges, there is a slight improvement in EBIT margin compared to the previous year, though it remains negative.

Balance Sheet

Neutral

Culp's balance sheet presents a stable equity base, but the debt-to-equity ratio is relatively low at 0.04, indicating low leverage. The equity ratio of 100% in the TTM period shows a strong reliance on equity financing. However, the return on equity remains negative due to sustained net losses, highlighting profitability issues.

Cash Flow

Negative

The cash flow analysis reveals negative free cash flow growth, with the TTM period showing a free cash flow of -$14.58 million. The operating cash flow to net income ratio is negative, driven by consistent negative operating cash flows, which may affect liquidity and financial flexibility moving forward.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
213.99M	225.33M	234.93M	294.84M	299.72M	256.17M
	Gross Profit
22.61M	27.94M	10.90M	36.09M	49.83M	40.50M
	EBIT
-20.18M	-11.31M	-27.08M	-308.00K	10.11M	6.07M
	EBITDA
-14.01M	-3.85M	-21.11M	7.25M	19.42M	551.00K
	Net Income Common Stockholders
-21.90M	-13.82M	-31.52M	-3.21M	3.22M	-11.03M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
19.02M	10.91M	22.37M	14.55M	45.71M	74.98M
	Total Assets
106.51M	132.05M	152.18M	177.56M	214.08M	215.08M
	Total Debt
16.70M	4.48M	6.25M	10.28M	9.56M	42.19M
	Net Debt
-2.31M	-5.53M	-14.71M	-4.27M	-27.45M	-27.60M
	Total Liabilities
49.58M	55.92M	63.10M	58.06M	85.07M	85.39M
	Stockholders Equity
56.92M	76.13M	89.08M	119.50M	129.01M	129.70M
Cash Flow		Free Cash Flow
-14.58M	-11.94M	5.70M	-23.14M	14.81M	385.00K
	Operating Cash Flow
-11.68M	-8.22M	7.80M	-17.44M	21.48M	4.97M
	Investing Cash Flow
-925.00K	-2.43M	-752.00K	2.50M	-10.68M	-5.71M
	Financing Cash Flow
5.35M	-126.00K	-436.00K	-7.42M	-43.71M	30.64M

Culp Technical Analysis

Technical Analysis Sentiment

Negative

Last Price4.10

Price Trends

50DMA

5.09

Negative

100DMA

5.23

Negative

200DMA

5.26

Negative

Market Momentum

MACD

-0.02

Positive

RSI

41.84

Neutral

STOCH

13.48

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CULP, the sentiment is Negative. The current price of 4.1 is below the 20-day moving average (MA) of 4.95, below the 50-day MA of 5.09, and below the 200-day MA of 5.26, indicating a bearish trend. The MACD of -0.02 indicates Positive momentum. The RSI at 41.84 is Neutral, neither overbought nor oversold. The STOCH value of 13.48 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CULP.

Culp Risk Analysis

Culp disclosed 22 risk factors in its most recent earnings report. Culp reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Culp Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SGI	73 Outperform	$11.65B	25.89	87.10%	0.99%	0.11%	3.48%
MHK	66 Neutral	$6.39B	12.13	6.82%	―	-2.68%	―
LEG	60 Neutral	$977.06M	―	-50.58%	2.76%	-7.27%	-272.76%
Sector *	59 Neutral	$11.74B	10.16	-1.06%	4.15%	1.27%	-16.61%
MLKN	58 Neutral	$1.14B	39.49	2.28%	4.47%	-2.68%	-56.16%
HNI	52 Neutral	$1.93B	14.32	17.42%	3.20%	3.80%	182.70%
CULP	49 Neutral	$51.49M	―	-31.18%	―	-9.80%	-59.08%

* Consumer Cyclical Sector Average

Performance Comparison

CULP

Culp

4.10

-0.40

-8.89%

MLKN

MillerKnoll, Inc.

17.73

-7.24

-28.99%

HNI

43.24

2.44

5.98%

LEG

Leggett & Platt

7.49

-10.48

-58.32%

MHK

Mohawk

108.95

-10.72

-8.96%

SGI

Somnigroup International

60.16

8.65

16.79%

Culp Earnings Call Summary

Earnings Call Date: Mar 5, 2025 | % Change Since: -18.33% | Next Earnings Date: Jun 25, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted significant improvements in operational efficiencies and market share growth in the Mattress Fabrics and hospitality contract businesses, driven by successful restructuring and innovation efforts. However, these positive developments were counterbalanced by a notable decline in overall sales, particularly in the residential upholstery segment, and a continued net loss. The call also addressed the challenges posed by tariff and trade uncertainties.

Highlights

Mattress Fabrics Segment Restructuring Success

Achieved a 58.3% sequential reduction in operating loss in the Mattress Fabrics segment, building on a 70.7% reduction in the previous quarter. Restructuring initiatives have been largely completed, leading to improved efficiencies and cost savings.

Near Breakeven Adjusted EBITDA

Achieved near breakeven consolidated adjusted EBITDA for the quarter with a $1.1 million improvement sequentially compared to last quarter, despite $3.4 million less in sales.

Hospitality Contract Business Growth

Sales for the hospitality contract business increased both year-over-year and sequentially, representing 40% of upholstery fabrics total sales for the quarter.

Successful Product Development and Innovation

Introduced new product capabilities such as quilted mattress covers and patented FR inlay for flame retardant knit products. Expanded window treatment offerings with new hotel brand standards.

Lowlights

Overall Sales Decline

Net sales were down 13.5% compared with the prior year period, primarily due to ongoing weakness in the home furnishings and bedding industries.

Residential Upholstery Fabric Sales Pressure

Residential upholstery fabric sales were significantly pressured by weak industry demand and inventory adjustments from a large customer, leading to year-over-year and sequential declines.

Net Loss for the Quarter

Reported a net loss of $4.1 million or $0.33 per diluted share, compared with a net loss of $3.2 million or $0.26 per diluted share for the prior year period.

Tariff and Trade Uncertainty

Ongoing uncertainty around tariffs and global trade issues are impacting sales and customer projects, particularly affecting upholstery fabrics with about 30% of China-produced fabrics shipped to the USA.

Company Guidance

During the Culp, Inc. Third Quarter Fiscal 2025 Earnings Conference Call, the company provided detailed guidance on its financial outlook and restructuring efforts. Culp reported a sequential improvement in operating results despite macroeconomic challenges, with a 58.3% reduction in operating loss in the Mattress Fabrics segment, building on a 70.7% reduction from the previous quarter. The company achieved near breakeven consolidated adjusted EBITDA for the quarter, marking a $1.1 million improvement sequentially. Culp also highlighted a significant restructuring initiative in the Mattress Fabrics segment, including stopping production at its Canadian facility and relocating equipment to North Carolina. The sale of the Canadian facility is anticipated to generate $6 million to $8 million in cash proceeds. Moreover, Culp is targeting additional annualized savings of approximately $1 million through labor and professional fee cost-saving actions, on top of the $10 million to $11 million from the restructuring plan, and is exploring further strategic actions for fiscal 2026. Despite industry pressures, Culp remains optimistic about gaining market share, particularly in the Mattress Fabrics and hospitality contract fabric businesses, which have shown sequential and year-over-year sales growth.

Culp Corporate Events

Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures

Culp Expands Board Amidst Financial Restructuring

Neutral

Mar 5, 2025

On March 5, 2025, Culp, Inc. announced the election of William L. Tyson to its Board of Directors, expanding the board from seven to eight members. Tyson, with over 30 years of experience in investment banking and capital markets, is expected to bring strategic growth insights to the company. Concurrently, Culp reported its third-quarter fiscal 2025 results, highlighting a consolidated net sales decline to $52.3 million, a 6.1% sequential drop. Despite the sales decline, the company saw improvements in its mattress fabrics segment due to restructuring efforts, achieving a 58.3% reduction in operating loss. Culp also entered a conditional agreement to sell its Canadian real estate, expecting $6.0 to $8.0 million in proceeds, which will aid in liquidity and debt reduction. The company remains optimistic about future profitability and market share growth, driven by a streamlined cost structure and ongoing restructuring benefits.

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.