We examined four publicly traded North American furniture manufacturers: La-Z-Boy (LZB), MillerKnoll (MLKN), Steelcase (SCS), and HNI Corporation (HNI). Our focus on premium furniture manufacturers enables direct comparison of similar business models within the high-end segment. While a broader set including furniture retailers (Crate & Barrel) and DTC businesses (Wayfair) exists, we prefer depth over breadth. We benchmark performance against the S&P 500 and relevant industry indices to contextualize relative returns.
Thesis: La-Z-Boy at $35 represents compelling value. The company trades at peer multiples despite superior competitive positioning through domestic manufacturing, generates strong free cash flow with minimal leverage, yet the market prices in permanent demand impairment. The risk/reward asymmetry favors patient capital.
| Company | Market Cap | EV/EBITDA | P/E | ROE | Debt/Equity | Revenue |
|---|---|---|---|---|---|---|
| La-Z-Boy | $1.62B | 8.6x | 16.7x | 9.9% | 0.48 | $2.11B |
| MillerKnoll | $1.36B | 7.8x | NM | -2.4% | 1.36 | $3.95B |
| Steelcase | $2.06B | 8.0x | 19.8x | 13.3% | 0.61 | $3.22B |
| HNI Corp | $2.08B | 8.1x | 14.4x | 18.5% | 0.72 | $2.58B |
Note: Steelcase's pending acquisition by HNI at $18.30/share represents 5.8x TTM Adjusted EBITDA including synergies.
LZB trades inline with commercial office furniture peers despite fundamentally different exposure. MillerKnoll, Steelcase, and HNI derive substantial revenue from corporate office build-outs—a segment pressured by hybrid work and reduced corporate real estate. LZB serves residential customers with demonstrated post-pandemic demand for home customization.
The valuation anomaly: LZB's 8.6x EV/EBITDA matches peers while maintaining positive ROE, minimal leverage, and residential market positioning. MillerKnoll's lower multiple reflects negative returns and elevated debt. HNI's Steelcase acquisition at 5.8x EBITDA (with synergies) suggests LZB's standalone multiple reflects no premium for superior capital structure or market positioning.
La-Z-Boy manufactures 80% of products in North America. This operational detail matters because furniture import tariffs reached 25% in 2025, with Section 232 duties hitting upholstered imports particularly hard. Import-dependent competitors face double-digit price increases or margin compression. LZB implemented "single-digit" price increases—management described them as "at the very low end of what we're hearing in the market"—yet maintained flat wholesale volumes year-over-year.
CFO Taylor Luebke noted in November 2025 that "net versus competition, that puts us in a pretty good spot with some of the tariff expectations." The market assigns zero value to this structural advantage. Competitors absorbing 15-30% cost increases while LZB gains pricing power represents a significant, unrecognized shift in competitive dynamics.
LZB maintains $147.5M in net debt ($3.58/share), a 1.91x current ratio, and 0.48x debt/equity. Operating cash flow of $187.3M less $74.3M capex yields $113M free cash flow—approximately 7% FCF yield on market cap. The company pays a 2.25% dividend while maintaining financial flexibility.
Compare this to MillerKnoll's 1.36x leverage and $1.3B long-term debt, or HNI's 0.72x leverage. LZB's conservative structure provides optionality during downturns and for opportunistic capital allocation.
The furniture industry contracted through 2024-2025: orders down 9% YoY in November 2024, consumer confidence declining, housing market volatility with 6.96% mortgage rates. Yet existing home sales rose 9.3% YoY in December 2024—a potential inflection.
Millennials (median age 38 for first-time homebuyers) represent the largest generational cohort entering peak furniture purchasing years. Housing turnover remained suppressed as homeowners with 3% mortgages avoided 7% refinancing. As rate differentials normalize or life events force moves, deferred demand releases. Demographics and normalized housing turnover support multi-year recovery.
LZB's operational execution during contraction—plant consolidations, distribution optimization, retail network rationalization—positions the company for margin expansion when volumes recover. Management's "Century Vision" initiatives target supply chain efficiency and enhanced customer experience.
Furniture manufacturing is cyclical. Raw materials comprise ~50% of production costs; commodity volatility impacts margins. The company experienced 15% raw material cost increases in Q3 2023. Retaliatory tariffs (like Canada's 10% on U.S. furniture) could harm cross-border sales. Execution risk exists in distribution redesign and retail optimization. Online competitors continue gaining share.
These risks appear priced into a stock trading near 52-week lows at 8.6x EBITDA with a 2.25% dividend yield. Analyst consensus targets of $42.50-46.00 suggest 21-31% upside.
Downside case (recession, margin compression): $28-30 (-20%)
Base case (modest recovery, margin stabilization): $42-45 (+26%)
Upside case (accelerated recovery, M&A interest): $50-55 (+50%)
The distribution skews positive with limited absolute downside given balance sheet strength and consistent free cash flow.
La-Z-Boy at $35 offers value investors a quality business at cyclical trough valuation. The company generates 7% free cash flow yield with minimal debt while maintaining structural manufacturing advantages the market ignores. The setup presents asymmetric returns: limited downside from fortress balance sheet and cash generation versus 20-50% upside as industry normalizes.
The market prices LZB as if depressed demand, no tariff benefit, and no housing recovery will persist indefinitely. This is unlikely. Cycles turn, structural advantages compound, and quality businesses eventually trade at fair value.
This analysis is for educational purposes only and does not constitute investment advice.