Updated 3/10/25
Haverty Furniture Companies has been around for well over a century, carving out a solid reputation in the home furnishings industry. With its deep roots in the Southeast and Midwest, the company has built a loyal customer base over the years. But for investors, the focus isn’t just on furniture—it’s on whether this stock can keep delivering returns, particularly through dividends.
The home furnishings industry has had a rough stretch lately, facing challenges from shifting consumer spending habits and high interest rates. Despite these headwinds, Haverty has continued to prioritize shareholder returns. The dividend looks attractive at first glance, but is it sustainable? And does the current stock price offer good value for long-term investors? Let’s take a closer look.
Key Dividend Metrics
💰 Dividend Yield: 5.87%
📈 5-Year Average Dividend Yield: 3.77%
💵 Annual Dividend Payout: $1.28 per share
🔄 Dividend Growth: Strong track record, but signs of strain
⚠️ Payout Ratio: 105.88% (a potential red flag)
📆 Next Dividend Date: March 21, 2025
❌ Ex-Dividend Date: March 6, 2025
Dividend Overview
At nearly 6%, Haverty’s dividend yield is well above its historical average. That’s a tempting payout, especially for income-focused investors. However, high yields can sometimes signal trouble, and in this case, there are some concerns that need to be addressed.
The biggest issue is the payout ratio, which has soared past 100%. This means the company is paying out more in dividends than it’s bringing in through earnings. That’s not a sustainable strategy in the long run, and if profits don’t rebound, a dividend cut could be on the horizon.
On the bright side, Haverty has a long history of rewarding shareholders, even through economic downturns. That commitment to dividends is reassuring, but investors will need to keep an eye on the company’s financial health moving forward.
Dividend Growth and Safety
Haverty has been a consistent dividend payer for years, and investors have come to rely on that income. But with quarterly earnings down more than 45% year-over-year, the pressure is mounting.
The payout ratio tells a concerning story. A company can’t keep paying more than it earns indefinitely. If profits don’t improve, Haverty may be forced to trim its dividend to maintain financial stability.
There is some good news, though. The company still has a strong cash balance of $120 million, and it generates decent cash flow. That could help buy some time. But if revenue and earnings don’t stabilize, this high dividend yield may not last.
Chart Analysis
Overall Trend
The stock has been in a prolonged downtrend, with both the 50-day moving average and 200-day moving average sloping downward. The price has been trading below both moving averages for an extended period, reinforcing the bearish trend. Any attempt at a recovery has been short-lived, with the 50-day moving average acting as resistance multiple times.
Recent Price Action
The most recent closing price of $21.82 suggests continued weakness, as the stock remains near its 52-week low of $21.04. The price attempted to push higher during the session, reaching $22.23, but ultimately closed near the lower end of the range. This indicates selling pressure into strength, a sign that buyers lack conviction at current levels.
Volume Analysis
Volume for the day came in at 127,433, which is relatively modest. There is no major spike in volume that would suggest a significant shift in sentiment. Notably, previous attempts to break higher have not been accompanied by strong volume, meaning any upward movement has lacked momentum. The only standout volume event in the past few months occurred in early October, but it did not result in a sustained rally.
Relative Strength Index (RSI)
The RSI remains in a weak zone, hovering just above 30 but still well below the overbought threshold of 70. This suggests that while the stock is not deeply oversold, it also lacks any real buying momentum. RSI has shown brief signs of recovery over the past few months, but each bounce has been short-lived, in line with the overall downtrend.
Moving Averages Relationship
The distance between the 50-day moving average and the 200-day moving average remains wide, showing no sign of a reversal pattern. The 50-day moving average is below the 200-day moving average, a classic sign of a bearish market structure. Without a meaningful break above these levels, any upside will likely face strong resistance.
Support and Resistance Levels
There is a minor support zone around $21.50, which has held up in recent trading sessions, but it remains fragile. If the stock breaks below this level, it could quickly retest the 52-week low of $21.04. On the upside, $22.50 appears to be an initial resistance area, followed by stronger resistance around $24, where the stock previously failed to sustain a move higher.
Recent Candle Behavior
The last five candles have shown indecisiveness, with multiple small-bodied candles forming, reflecting hesitation in the market. The wicks on these candles indicate that sellers have stepped in each time the stock has tried to move higher. Without stronger buying interest, this pattern suggests the stock is struggling to find support.
Analyst Ratings
📊 Haverty Furniture Companies, Inc. (HVT) has recently received mixed analyst ratings, reflecting both optimism and concerns about its financial outlook. The current consensus price target is around $35.00, suggesting potential upside from current levels, but with some uncertainty regarding future earnings performance.
Upgrades 📈
🔹 In July 2023, an analyst initiated coverage on HVT with a buy rating and a price target of $41. The rationale behind this upgrade was the company’s strong position in the home furnishing market, improving operational efficiencies, and a commitment to returning value to shareholders through dividends. Analysts also pointed to the company’s historical resilience in economic downturns as a key factor in their optimistic outlook.
Downgrades 📉
🔻 In August 2024, another analyst downgraded the stock from buy to hold, citing weaker revenue trends and ongoing pressure on margins. A decline in consumer discretionary spending has negatively impacted the furniture industry, and HVT has not been immune to these challenges. Analysts also expressed concern about the company’s ability to maintain its current dividend payout in the face of declining profitability.
📌 The divergence in analyst ratings highlights the need for investors to weigh both the company’s strengths and the broader economic landscape when considering an investment in HVT.
Earnings Report Summary
Haverty Furniture Companies wrapped up the year with a mixed financial report, showing some real challenges but also a few bright spots. The company has been navigating a tough retail environment, and the numbers reflect that.
Fourth Quarter Performance
In the final quarter of 2024, sales came in at 184.4 million, which was down about 12.5 percent from the same period the year before. Comparable store sales were hit even harder, dropping 13.7 percent. That’s a clear sign that shoppers have been holding back on big furniture purchases, possibly due to economic uncertainty or shifting spending habits.
Even with the drop in sales, Havertys managed to keep a solid 61.9 percent gross profit margin, showing that they’re still running the business efficiently. The company ended the quarter with a 9.6 million pretax profit and an operating margin of 5.2 percent. Net income came in at 8.2 million, quite a bit lower than last year’s 15 million. That translated to earnings per share of 0.49, compared to 0.90 in the same quarter a year ago.
Full-Year Results
Zooming out to the full year, total sales were 722.9 million, which was 16.1 percent lower than in 2023. Comparable store sales saw a 16.7 percent decline, so the slowdown wasn’t just a one-quarter issue—it’s been a longer-term challenge. The company’s gross profit margin for the year stayed fairly strong at 60.7 percent, though slightly below last year’s level.
Pretax profit for the year dropped to 26.2 million, with an operating margin of 3.6 percent. Net income fell to 19.96 million, which was a sharp decline from the 56.32 million recorded in 2023. That meant diluted earnings per share of 1.19, compared to 3.36 the previous year. It’s clear that Havertys had to work through a tougher environment in 2024.
Financial Strength
On the positive side, Havertys ended the year in a strong cash position. The company had 120 million in cash and no funded debt, which gives it some breathing room to handle ongoing challenges. Inventory levels were also cut by 13 percent compared to late 2023, a smart move to keep things lean and avoid excess stock sitting around.
Business Highlights
Despite the slowdown in overall sales, Havertys’ design business actually performed well, growing by 19 percent in the fourth quarter. Customers in this segment spent more on average, with ticket sizes hitting 7,300, up 5 percent from last year. The special order business also expanded, now making up 36 percent of upholstery sales, a 10 percent increase over the previous year. This shift toward higher-margin, customized furniture could be a good long-term trend for the company.
Looking Ahead
Havertys is planning to open three new stores in 2025, bringing the total to 129 locations by year-end. The company is focusing on expanding in the Houston market, using its Dallas distribution center as a key hub.
For the upcoming year, management expects gross profit margins to land between 60.0 and 60.5 percent, with an effective tax rate of about 28 percent. While the retail environment is still uncertain, the company is optimistic that business conditions could improve in the latter half of 2025.
Havertys certainly had a tough year, but with strong margins, solid cash reserves, and smart expansion plans, it’s positioning itself to ride out the downturn and prepare for future growth.
Financial Health and Stability
While Haverty isn’t in immediate financial distress, its balance sheet has weakened.
- Cash on hand: $120 million
- Total debt: $218 million
- Debt-to-equity ratio: 71%
- Current ratio: 1.82 (indicating decent liquidity)
A debt-to-equity ratio at this level isn’t alarming, but it does signal that the company has taken on more debt. If business conditions deteriorate further, this could become a bigger issue.
Operating cash flow remains positive, which is a plus. Over the last twelve months, the company has generated $58.9 million in operating cash flow. That provides some cushion, but with declining earnings, the company will need to tread carefully.
Valuation and Stock Performance
HVT’s stock has had a tough year, trading near its 52-week low at $21.90. The stock is down more than 32% in the last year, significantly underperforming the broader market.
From a valuation standpoint, there are some mixed signals:
- Trailing P/E: 18.34 (a bit elevated given earnings declines)
- Forward P/E: 13.64 (suggesting expectations for a rebound)
- Price-to-book ratio: 1.15 (indicating a fair valuation based on assets)
At these levels, Haverty isn’t necessarily expensive, but it’s also not a screaming bargain. If earnings continue to decline, the stock could struggle to gain momentum. However, if the company can stabilize profitability, the current price might offer a decent entry point for long-term investors.
Risks and Considerations
- Earnings and revenue are shrinking – Quarterly earnings are down more than 45% year-over-year, and revenue has dropped 12.5%. If these trends continue, dividend stability could be in jeopardy.
- High payout ratio – A payout ratio above 100% isn’t sustainable for long. If earnings don’t rebound, a dividend cut could be on the table.
- Rising debt levels – Debt has been climbing, and while it’s not yet a major concern, continued deterioration in financials could make it harder to maintain dividend payments.
- Consumer spending pressures – The furniture industry is heavily tied to consumer discretionary spending. If economic conditions worsen, Haverty’s sales could take another hit.
- High short interest – More than 10% of the company’s float is currently being shorted, signaling that some investors are betting against a turnaround.
Final Thoughts
Haverty offers an attractive dividend yield, but it comes with risks. The payout is generous, but with a payout ratio above 100%, it’s not clear how long that can last. The stock is cheap compared to historical levels, but without an earnings recovery, it may struggle to gain traction.
For income-focused investors, this is a stock worth keeping an eye on, but it’s not without its challenges. The next few earnings reports will be crucial in determining whether the company can maintain its dividend, or if a cut is on the horizon.
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