ThePessimist (99.48) Submitted: 4/24/2007 4:20:17 PM : Start Price: $33.89 HNI Score: -6.96

HNI has been beaten down lately due to weakness in both its segments. Hearth products go into homes, so those have been hurt by the homebuilding slump. Office furniture sales have been weak too.While this all sounds bad, the consensus estimates for FY07 and 08 are still $2.37 and $2.85 respectively, leaving P/E ratios at reasonable 17.7x and 14.8x. It’s hard to believe that homebuilding can get too much worse, and the low unemployment and continuing commercial construction suggest that office furniture will pick up too.Note that even with all of its challenges, HNI has been a free cash flow machine. Management has largely used the FCF on share repurchases, helping to prop up EPS.