HVT

We rate HAVERTY FURNITURE COMPANIES INC (HVT) as a Hold with a composite score of 58.3/100 at a current price of $25.26. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in momentum (74th percentile) and stability (73th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (24th percentile) and quality (54th percentile) tempers our overall conviction. We assign a Narrow Moat rating (40/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

HAVERTY FURNITURE COMPANIES INC holds a lower-quartile position (#46 of 50) within the Retail Trade sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 58.3/100 places it at rank #863 in our full 7,333-stock universe. At $357M in market capitalization, HAVERTY FURNITURE COMPANIES INC is a small-cap player in the Retail Trade space, which limits certain scale advantages but may allow for more agile strategic execution.

The outlook is moderately positive, with revenue expanding at 9% and favorable momentum (74th percentile) reflecting constructive market sentiment. The business shows steady execution, though the growth rate is below the levels typically associated with high-conviction growth stories. Momentum confirmation provides support for the current price level.

The margin cascade tells an important story: gross margins of 61% (+24.4pp vs sector) narrow to operating margins of 2% (-1.5pp vs sector) and net margins of 2.2%, yielding a gross-to-net conversion rate of 4%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $25.26, HAVERTY FURNITURE COMPANIES INC appears undervalued relative to its fundamentals. Our value factor score of 70/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 26.4x (a 23% premium to the sector median of 21.4x), EV/EBITDA of 18.2x (at a premium), P/B of 1.4x, P/S of 0.6x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a Medium uncertainty rating to HAVERTY FURNITURE COMPANIES INC. The stock presents a balanced risk profile: significant leverage (113% debt-to-equity) and the combination of leverage (113% D/E) and thin margins (2.2% net) amplifies downside risk. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: significant leverage (113% debt-to-equity); the combination of leverage (113% D/E) and thin margins (2.2% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 73th percentile and quality factor at the 54th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 61% provide a buffer against cost pressures; above-average stability (73th percentile) suggests predictable business dynamics; a 5.84% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate HAVERTY FURNITURE COMPANIES INC's capital allocation as Poor. Key concerns include suboptimal returns on capital. Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — HAVERTY FURNITURE COMPANIES INC significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, HAVERTY FURNITURE COMPANIES INC receives a Hold rating with a composite score of 58.3/100 (rank #863 of 7,333). Our quantitative framework assigns a Narrow Moat (40/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 59/100.

Our analysis supports a neutral stance on HAVERTY FURNITURE COMPANIES INC. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.