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Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Research from Water Tower Research

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Equity Bottom-Up

Bassett Furniture Inds / Equity Bottom-Up

<ul><li>BSET posted 1QFY25 EPS of $0.21, $0.18 better than our estimate of $0.03 and $0.35 better than 1QFY24 as restructuring gains begin to make progress, even as demand remains challenged.</li><li>Sales were down ~5.1% Y/Y but came in about $2 million better than we expected, which is encouraging given all of the headwinds facing the industry (including the slow housing market, persistent higher-than- normal inflation, the lingering effects of the pandemic-era demand pull-forward, and, lately, the increase in economic uncertainty arising from the ongoing tariff policy <span style="font-size: var(--content-font-size);">volatility/uncertainty that appears to be negatively affecting </span>consumer confidence and investment and consumption decision- making).</li><li>But the real story here is the margin gains on the back of the company’s announced restructuring initiatives. </li></ul>

BSET posted 1QFY25 EPS of $0.21, $0.18 better than our estimate of $0.03 and $0.35 better than 1QFY24 as restructuring gains begin to make progress, even as demand remains challenged.Sales were down ~5.1% Y/Y but came in about $2 million better than we expected, which is encouraging given all of the headwinds facing the industry (including the slow housing market, persistent higher-than- normal inflation, the lingering effects of the pandemic-era demand pull-forward, and, lately, the increase in economic uncertainty arising from the ongoing tariff policy volatility/uncertainty that appears to be negatively affecting consumer confidence and investment and consumption decision- making).But the real story here is the margin gains on the back of the company’s announced restructuring initiatives. 

BSET. - Strong Margin Growth on Restructuring Augments 1QFY25 EPS of $0.21A Vs. $0.03E