Flexsteel Industries, Inc. (FLXS) | Investment Case

1. Company Snapshot

1.a. Company Description

Flexsteel Industries, Inc., together with its subsidiaries, operates as a manufacturer, importer, and online marketer of upholstered and wooden furniture for residential and contract markets in the United States.It offers upholstered furniture, such as sofas, loveseats, chairs, reclining and rocker-reclining chairs, swivel rockers, sofa beds, convertible bedding units, occasional tables, desks, dining tables and chairs, and bedroom furniture.The company distributes its products through e-commerce channels and dealer network.

Flexsteel Industries, Inc.was founded in 1893 and is based in Dubuque, Iowa.

Show Full description

1.b. Last Insights on FLXS

Flexsteel Industries' recent performance was negatively impacted by deteriorating U.S. consumer confidence and concerns about future business growth, posing risks to the industry. Despite strong Q2 earnings and revenue beats, the company's gross margin challenges, driven by higher freight costs and competitive retail environments, may hinder its growth. Additionally, the cyclical nature of the consumer discretionary sector and Flexsteel's tariff exposure may further exacerbate its challenges.

1.c. Company Highlights

Last Price	40.22
Change Percentage	-2.94%
Open	41.13
Previous Close	41.44
Market Cap ( Millions)	212
Volume	22222
Year High	65.87
Year Low	29.38
M A 50	38.96
M A 200	38.08

FCF Yield	16.26%
Dividend Yield	1.84%
ROE	13.64%
Debt / Equity	33.58%
Net Debt / EBIDTA	58.10%
Price To Book	1.24
Price Earnings Ratio	9.48
Price To FCF	6.15
Price To sales	0.47
EV / EBITDA	6.99

2. Flexsteel Industries' Q1 FY2026 Earnings: A Strong Start to the Year

Flexsteel Industries reported a robust first quarter, with net sales reaching $110.4 million, representing a 6.2% year-over-year growth. The company's operating margin expanded to 8.1%, up 230 basis points from the prior year quarter, marking the tenth consecutive quarter of adjusted operating margin improvement. Earnings per share (EPS) came in at $1.31, significantly beating analyst estimates of $0.78.

Publication Date: Oct -27

                                    📋 Highlights
                                    Sales Growth::
                                                Net sales increased 6.2% to $110.4M, driven by Source Sauce Seating and $2.4M in tariff surcharge pricing.
Operating Margin Improvement::
                                                Operating margin rose to 8.1%, a 230-basis-point increase from 5.8% in the prior year quarter.
Tariff Impact Mitigation::
                                                Tariff surcharges were raised to 15–30% on impacted products, partially offsetting cost increases but risking demand decline.
New Product Contribution::
                                                Over 50% of sales came from new products, including the Pulse power motion furniture and Zen wellness series.
Short-Term Margin Risks::
                                                New Section 232 tariffs expected to dilute margins by 30% by year-end, with demand uncertainty despite competitive pricing actions.

                                

Revenue Growth Drivers

The revenue growth was primarily driven by the company's Source Seating products, partially offset by lower unit volume in made-to-order soft seating products and Home Styles branded ready-to-assemble category. Flexsteel Industries' diversified growth strategies, including new product introductions and share gains with strategic accounts, contributed to the sales increase. As Derek Paul Schmidt, President and CEO, noted, "Our growth is driven by new products and share gains with strategic accounts in our core, and by ramping sales in our case goods and health and wellness product categories in new and expanded markets."

Tariff Impact and Mitigation Strategies

The company faced challenges due to tariffs, with a $2.4 million impact in the quarter. Flexsteel Industries has been proactive in mitigating the effects, increasing tariff surcharges on impacted products to partially offset the increased costs. The company expects the net impact of the tariff change and its subsequent pricing response to adversely affect demand and dilute margins in the short term.

Valuation and Outlook

With a P/E Ratio of 8.52 and an EV/EBITDA of 6.34, Flexsteel Industries appears to be reasonably valued. Analysts estimate revenue growth at 2.7% for the next year. Given the company's strong Q1 performance and diversified growth drivers, it is well-positioned to navigate the challenges posed by tariffs and capitalize on opportunities in the furniture market.

Long-term Prospects

Flexsteel Industries remains committed to its long-term goals, including achieving 30% to 40% of sales from new products. With over 50% of current sales coming from new products, the company is on track to meet this objective. The introduction of new sub-brands, such as Pulse and Zen series, is expected to drive future growth and expand the company's presence in the market.

3. NewsRoom

Flexsteel Recognizes Channel Challenges, With Even Higher Tariffs Coming

Oct -21

Source: seekingalpha.com

Flexsteel Industries, Inc. (FLXS) Q1 2026 Earnings Call Transcript

Oct -21

Source: seekingalpha.com

Flexsteel Industries (FLXS) Tops Q1 Earnings and Revenue Estimates

Oct -20

Source: zacks.com

Look Beyond Earnings: Bet on 4 Stocks With Rising Cash Flows

Oct -14

Source: zacks.com

New Strong Buy Stocks for Oct. 13: RELL, W, and More

Oct -13

Source: zacks.com

Flexsteel Industries, Inc. Announces Change to Board of Directors

Oct -09

Source: businesswire.com

Flexsteel Industries, Inc. to Participate in the Lytham Partners Fall 2025 Investor Conference on September 30, 2025

Sep -19

Source: businesswire.com

2 Furniture Stocks in Focus Despite Challenging Industry Landscape

Sep -18

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.00%)

6. Segments

Residential

Expected Growth: 4.0%

Residential segment growth of 4.0% from Flexsteel Industries, Inc. is driven by increasing demand for home furnishings, rising consumer spending, and growing popularity of online furniture shopping. Additionally, Flexsteel's strategic investments in e-commerce capabilities, product innovation, and supply chain optimization are contributing to the segment's growth.

7. Detailed Products

Home Styles

A collection of stylish and functional furniture for the home, including bedroom, dining, living room, and office furniture.

Commercial Seating

A range of seating solutions for commercial environments, including office chairs, stools, and benches.

Healthcare Furniture

Specialized furniture designed for healthcare facilities, including patient rooms, waiting areas, and administrative offices.

Hospitality Furniture

Customizable furniture solutions for hotels, resorts, and restaurants, including casegoods, upholstery, and seating.

Outdoor Furniture

Durable and stylish outdoor furniture for residential and commercial spaces, including patio sets, benches, and tables.

8. Flexsteel Industries, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Flexsteel Industries, Inc. faces moderate threat from substitutes due to the availability of alternative furniture products from competitors.

Bargaining Power Of Customers

Flexsteel Industries, Inc. has a diverse customer base, which reduces the bargaining power of individual customers.

Bargaining Power Of Suppliers

Flexsteel Industries, Inc. relies on a few key suppliers for raw materials, which gives them some bargaining power.

Threat Of New Entrants

The furniture industry has high barriers to entry, making it difficult for new entrants to compete with established players like Flexsteel Industries, Inc.

Intensity Of Rivalry

The furniture industry is highly competitive, with many established players competing for market share, which increases the intensity of rivalry for Flexsteel Industries, Inc.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	20.02%
Debt Cost	3.95%
Equity Weight	79.98%
Equity Cost	6.93%
WACC	6.33%
Leverage	25.03%

11. Quality Control: Flexsteel Industries, Inc. passed 7 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Flexsteel

A-Score: 5.8/10

Value: 8.4

Growth: 7.1

Quality: 6.0

Yield: 4.0

Momentum: 6.5

Volatility: 2.7

1-Year Total Return ->

Bassett Furniture

A-Score: 5.4/10

Value: 5.9

Growth: 1.3

Quality: 4.4

Yield: 9.0

Momentum: 7.0

Volatility: 5.0

1-Year Total Return ->

Hooker Furnishings

A-Score: 4.9/10

Value: 9.8

Growth: 1.0

Quality: 5.0

Yield: 9.0

Momentum: 1.5

Volatility: 3.3

1-Year Total Return ->

Virco Mfg

A-Score: 4.2/10

Value: 6.7

Growth: 8.3

Quality: 5.5

Yield: 1.0

Momentum: 0.0

Volatility: 3.7

1-Year Total Return ->

Hamilton Beach Brands

A-Score: 4.2/10

Value: 6.2

Growth: 5.6

Quality: 5.0

Yield: 6.0

Momentum: 0.0

Volatility: 2.3

1-Year Total Return ->

MasterBrand

A-Score: 3.6/10

Value: 6.8

Growth: 4.7

Quality: 4.4

Yield: 0.0

Momentum: 1.5

Volatility: 4.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-8.23%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.33%

Flexsteel Industries, Inc. - US3393821034

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on FLXS

1.c. Company Highlights

Strong Momentum

Average Yield

Medium Volatility

Earnings Beats

Revenues Miss

Revenues Beats

Stable Momentum

Fairly Valued

Average Growth

Higher Growth

Average Quality

2. Flexsteel Industries' Q1 FY2026 Earnings: A Strong Start to the Year

Revenue Growth Drivers

Tariff Impact and Mitigation Strategies

Valuation and Outlook

Long-term Prospects

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.00%)

6. Segments

Residential

Expected Growth: 4.0%

7. Detailed Products

Home Styles

Commercial Seating

Healthcare Furniture

Hospitality Furniture

Outdoor Furniture

8. Flexsteel Industries, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Flexsteel Industries, Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

40.22$

Current Price

40.22$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA