New value analysis of Culp Inc (CULP:NYSE) 2018
New Value Analysis of Culp Inc (NYSE:CULP)
A new value analysis of Culp Inc (NYSE:CULP), a company listed on the New York Stock exchange, has been added to our research pages here.
Culp, Inc. manufacturers, sources, and markets mattress fabrics and sewn covers used for covering mattresses and foundations and other bedding products; and upholstery fabrics, including cut and sewn kits, primarily used in production of upholstered furniture.
If a value investor is looking for a margin of safety when owning the common stock of an entity, one of the best ways of of getting the margin of safety is for the entity to have zero debt. CULP has zero funded debt.
It is still possible to pay a price that is too high for an entity with a good margin of safety. So, it is still important to take account of other value statistics. However, it is unlikely that an entity with zero debt will trade very cheaply in comparison with earnings, assets or dividend returns. Value investors do not want to pay a high price, but if the price is anywhere near fair value the entity can be included in a diversified portfolio.
CULP has been making significant capital investments in the four years prior to 2018. The capital investment has reduced earning and has increased depreciation. Capital expenditure is now expected to decline, which will create an increase in reported earnings. Value investors will need to make sure that capital expenditure outpaces depreciation over the next few years to maintain the capital base of the company. In CULP’s case, capital expenditure does not have to stay at the high levels of the period 2013 to 2017, but it should be higher than depreciation.
Risk to common stockholders in CULP is fairly low. There is some risk to shareholders from the relatively low yield and the dividend history.
To find out if a value investor should consider an investment in Culp Inc common stock click here to download the new analysis.
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