Haverty Furniture: A Value Play with Downside Protection and Margin Expansion Potential

In a market still reeling from economic uncertainty, Haverty Furniture Companies Inc. (HVT) stands out as a compelling value investment. With a fortress balance sheet, improving operational metrics, and a clear path to margin expansion, this 150-year-old retailer is proving that old-school fundamentals can thrive in modern markets. Let's break down why HVT deserves a spot in your portfolio-and why the risks are far outweighed by the rewards.

Revenue Growth and Profitability: A Tale of Two Metrics

Haverty's third-quarter 2025 results were nothing short of impressive. The company reported , a , driven by a and . , this was largely due to strategic investments in marketing and salaries-expenses that signal long-term growth intent rather than operational distress according to Seeking Alpha.

The real star of the show? Gross profit margins, which . In an industry plagued by margin compression, Haverty's ability to maintain pricing power and supply chain efficiency is a testament to its brand strength and customer loyalty. , there's clear room for further margin expansion as reported in the earnings call.

Balance Sheet Strength: A Shield Against Downturns

Here's where Haverty shines brightest. As of Q3 2025, the company held and, critically, no debt according to Seeking Alpha. This isn't just a defensive advantage-it's a strategic one. With zero interest burdens and a liquidity buffer large enough to weather multiple quarters of soft demand, Haverty is uniquely positioned to capitalize on acquisition opportunities or accelerate store expansions when the economy stabilizes.

Moreover, . This improvement, , suggests management is prioritizing profitability without sacrificing growth.

Valuation: A Bargain in a Premium Market

While Haverty's P/E ratio isn't explicitly stated in recent filings, we can infer it's attractively low. With a basic EPS of $0.29 and a post-earnings stock price of , the implied P/E is roughly -a steep discount to furniture peers like Ashley Furniture (P/E ~120) and Ethan Allen (P/E ~110) as reported in the earnings call. Even more compelling is the , which, while modest, shows stability in a sector where margins often erode during downturns according to TradingView.

The key takeaway? Haverty is trading at a discount to its historical averages and peers, despite outperforming on both revenue and cash flow. For value investors, this is a classic "buy what's working, not what's hyped" scenario.

Risks and Realities: Is It All Smooth Sailing?

No investment is without risk. Haverty's net income decline and elevated SG&A expenses are red flags worth monitoring. However, these are not signs of distress but rather investments in growth. The company's management has been clear: they're willing to spend to secure market share in high-margin categories and expand into underserved regions as reported in the earnings call.

Additionally, the furniture sector is cyclical, and a prolonged recession could dampen discretionary spending. But with , Haverty has the flexibility to ride out a downturn without resorting to desperate measures like fire sales or layoffs.

The Bottom Line: A Buy for the Long Haul

Haverty Furniture isn't a flashy growth stock, but it's a masterclass in value investing. Its combination of revenue growth, margin resilience, and balance sheet strength offers a rare trifecta of downside protection and upside potential. For investors seeking a safe harbor in stormy markets, HVT checks all the boxes.

As the economy inches toward normalization, Haverty's strategic investments in comp-store sales, product categories, and store count will likely translate into margin expansion and earnings acceleration. At current valuations, the margin of safety is generous-and the long-term rewards could be substantial.