HNI Q1 Earnings: Navigating Headwinds in a Challenging Market

As HNI Corporation (NYSE: HNI) prepares to report Q1 2025 earnings on May 7, investors are bracing for a mixed bag of results that could test the company’s resilience in a slowing economy. With analysts forecasting an 8.1% year-over-year decline in EPS and flat revenue growth, the focus will be on management’s ability to pivot strategies amid headwinds—and whether the stock’s deep discount to Wall Street’s price target is justified.

Earnings Outlook: Contractions vs. Consensus

HNI’s Q1 EPS is expected to land at $0.34, down from $0.37 in Q1 2024. This marks a stark reversal from Q4 2024, when the company beat EPS estimates by 17% ($0.87 vs. $0.74) but missed revenue expectations by $14.5 million. The downward revisions—EPS estimates have been cut from $0.39 to $0.34 over the past 90 days—reflect growing skepticism about HNI’s ability to sustain momentum.

This trend contrasts sharply with the broader market, where the S&P 500 is projected to grow Q1 EPS by 12.37%. HNI’s struggles highlight sector-specific challenges, particularly in office furniture demand, its core business.

Revenue: A Sluggish Start to 2025

Analysts project Q1 revenue of $580.47 million, a -1.28% YoY decline from $588 million. While this represents a smaller contraction than the EPS hit, it underscores a stagnant top line. HNI’s reliance on the commercial real estate and office space sectors leaves it vulnerable to shifting workplace trends, such as hybrid work models reducing demand for traditional office setups.

The stock’s current price of $43.17—nearly 30% below its $61.67 average price target—suggests investors are pricing in persistent softness. Yet the dividend yield of 3.02% (with a sustainable payout ratio of 45.67%) offers a modest buffer for income-focused investors.

Analyst Sentiment: Caution vs. Long-Term Hope

While near-term estimates are muted, analysts see a rebound ahead. Full-year 2025 EPS is expected to rise to $3.40, with 2026 projections of $3.91 (+15.15% growth). The $2.69 billion revenue target for 2026 also implies a gradual recovery. However, these forecasts hinge on management’s ability to execute on cost controls and innovation, such as expanding its digital design tools or sustainable furniture offerings.

Key Drivers to Watch

1. Supply Chain Dynamics: HNI’s Q4 revenue miss was partly blamed on logistics delays. Management will need to clarify whether these issues persist or are resolved.
2. Demand Signals: Are businesses delaying furniture purchases due to economic uncertainty, or is the decline structural?
3. Margin Pressures: Input costs and pricing power will determine if EPS can rebound faster than revenue.

The Bottom Line: A Buying Opportunity or a Value Trap?

At a forward P/E of 11.71 and a PEG ratio of 1.14, HNI is trading at a discount to its growth trajectory. The $18.50 gap between its stock price and $61.67 price target implies significant upside if the company can meet 2026 forecasts. However, with the S&P 500 outperforming HNI by 20% in Q1 EPS growth, investors must weigh near-term risks against long-term potential.

The earnings call will be critical. If management provides credible guidance for 2025 and outlines steps to reignite growth—such as market share gains or new product launches—the stock could retrace its recent losses. For now, HNI remains a speculative play on a rebound in office infrastructure demand, but the path to recovery is narrow.

Final Take: HNI’s Q1 results are a litmus test for its adaptability. Investors should prioritize management’s tone on demand trends and cost discipline. With a dividend cushion and a valuation discount, the stock could offer asymmetric upside—if the company can prove it’s not just surviving, but thriving in a tough environment.