Flexsteel: Cyclical Recovery Continues, But Does Not Deserve A High Teens Multiple
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Flexsteel Industries, Inc. reported fiscal Q2 2025 results with 8.5% revenue growth and 45% operating income growth. Despite this, the company's 16x earnings multiple is considered unjustified due to its small size, tariff exposure, and cyclical nature. Gross margins fell by 90bps, impacted by higher freight costs and a competitive retail environment.
February 04, 2025 | 11:15 pm
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Flexsteel Industries reported strong Q2 2025 results with significant revenue and operating income growth. However, its 16x earnings multiple is seen as unjustified due to its small size, tariff exposure, and cyclical nature. Gross margins were pressured by higher freight costs.
Despite strong revenue and operating income growth, the market may not react positively due to concerns over the sustainability of these results given the company's exposure to tariffs and its cyclical nature. The decline in gross margins due to higher freight costs also adds pressure.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100