ETD
ETD
Hold 2026-03-23
Model
DCF
Price at Report
$21.90
Base IV
$24.14
Bear IV
$14.74
Bull IV
$33.30
Entry Zone: 15-22 · Sell Above: 28
Bore Family Office
Valuation Report — Ethan Allen Interiors Inc. (ETD) • March 23, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 10.50% • Current Price: $21.90
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Ethan Allen Interiors is a vertically integrated manufacturer and retailer of home furnishings, operating approximately 150 design centers across the United States plus international franchise locations. The company manufactures roughly 75% of its products in North American facilities — a competitive differentiator versus heavily import-dependent peers — but this also limits margin flexibility during demand downturns. Revenue has declined significantly from the COVID-era boom peak (~$818M in FY2022) as rising mortgage rates suppressed housing turnover; FY2025 revenue of $615M is down 25% from peak. ETD carries a net cash position (~$12M net cash) and has maintained its dividend, but the payout ratio has risen toward 78% on compressed earnings.
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 10.5% | 8–12% adequate |
| FCF Margin | 8.2% | 5–10% adequate |
| Debt / EBITDA | 1.6x | ≤2x conservative |
| Revenue Trend | Declining 3yr | 3-year directional trend |
| FCF Margin Trend | Contracting | Directional margin trajectory |
| Analyst Revisions | Downward revisions | Last 90 days consensus direction |
⚠️ Elevated value trap risk — verify thesis before acting
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $685 | $818 | $791 | $646 | $615 |
| EBITDA ($M) | $94 | $154 | $153 | $94 | $78 |
| Operating Income ($M) | $77 | $138 | $137 | $78 | $62 |
| Net Income ($M) | $60 | $103 | $106 | $64 | $52 |
| EPS (diluted) | $2.37 | $4.05 | $4.13 | $2.49 | $2.01 |
| Free Cash Flow ($M) | $118 | $56 | $87 | $71 | $50 |
| Annual DPS | $0.960 | $1.150 | $1.320 | $1.470 | $1.560 |
| Total Debt ($M) | $125 | $115 | $130 | $128 | $124 |
| Rev YoY Growth | — | +19.4% | -3.2% | -18.3% | -4.9% |
| Gross Margin | 57.4% | 59.3% | 60.7% | 60.8% | 60.5% |
| EBITDA Margin | 13.7% | 18.9% | 19.3% | 14.5% | 12.6% |
| Operating Margin | 11.3% | 16.9% | 17.3% | 12.1% | 10.1% |
| Net Margin | 8.8% | 12.6% | 13.4% | 9.9% | 8.4% |
📈 DCF Scenarios
$15
🔴 Bear
$24
📊 Base
$33
🚀 Bull
$21.90
Current Price
$27
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | -6.0% | 0.0% | 2.0% | 10.50% | $15 | ▼32.7% |
| 📊 Base | 2.5% | 4.0% | 2.5% | 10.50% | $24 | ▲10.2% |
| 🚀 Bull | 8.0% | 6.0% | 3.0% | 10.50% | $33 | ▲52.1% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: -6.0% | Stage 2: 0.0% | Terminal: 2.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $0.04B | $0.04B | $0.04B |
| Year 2 | Stage 1 | $0.04B | $0.03B | $0.07B |
| Year 3 | Stage 1 | $0.04B | $0.03B | $0.10B |
| Year 4 | Stage 1 | $0.04B | $0.02B | $0.12B |
| Year 5 | Stage 1 | $0.03B | $0.02B | $0.15B |
| Year 6 | Stage 2 | $0.03B | $0.02B | $0.16B |
| Year 7 | Stage 2 | $0.03B | $0.02B | $0.18B |
| Year 8 | Stage 2 | $0.03B | $0.02B | $0.20B |
| Year 9 | Stage 2 | $0.03B | $0.01B | $0.21B |
| Year 10 | Stage 2 | $0.03B | $0.01B | $0.22B |
| Terminal | — | TV=$0.4B | PV(TV)=$0.1B (40% of EV) | EV=$0.4B |
| Intrinsic Value | — | — | EV $0.4B − Net Debt → Equity / Shares | $15 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (10.50%) to get its present value. After Year 10, FCF grows at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $0.4B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $0.1B). Enterprise Value = PV of FCFs ($0.2B) + PV of TV ($0.1B) = $0.4B. Subtracting net debt gives equity value of $0.4B, divided by shares outstanding = $15 per share.
Base Scenario
Stage 1: 2.5% | Stage 2: 4.0% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $0.05B | $0.04B | $0.04B |
| Year 2 | Stage 1 | $0.05B | $0.04B | $0.08B |
| Year 3 | Stage 1 | $0.05B | $0.04B | $0.12B |
| Year 4 | Stage 1 | $0.05B | $0.03B | $0.15B |
| Year 5 | Stage 1 | $0.05B | $0.03B | $0.18B |
| Year 6 | Stage 2 | $0.05B | $0.03B | $0.21B |
| Year 7 | Stage 2 | $0.06B | $0.03B | $0.24B |
| Year 8 | Stage 2 | $0.06B | $0.03B | $0.27B |
| Year 9 | Stage 2 | $0.06B | $0.02B | $0.29B |
| Year 10 | Stage 2 | $0.06B | $0.02B | $0.32B |
| Terminal | — | TV=$0.8B | PV(TV)=$0.3B (49% of EV) | EV=$0.6B |
| Intrinsic Value | — | — | EV $0.6B − Net Debt → Equity / Shares | $24 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (10.50%) to get its present value. After Year 10, FCF grows at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $0.8B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $0.3B). Enterprise Value = PV of FCFs ($0.3B) + PV of TV ($0.3B) = $0.6B. Subtracting net debt gives equity value of $0.6B, divided by shares outstanding = $24 per share.
Bull Scenario
Stage 1: 8.0% | Stage 2: 6.0% | Terminal: 3.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $0.05B | $0.04B | $0.04B |
| Year 2 | Stage 1 | $0.05B | $0.04B | $0.09B |
| Year 3 | Stage 1 | $0.06B | $0.04B | $0.13B |
| Year 4 | Stage 1 | $0.06B | $0.04B | $0.17B |
| Year 5 | Stage 1 | $0.07B | $0.04B | $0.21B |
| Year 6 | Stage 2 | $0.07B | $0.04B | $0.25B |
| Year 7 | Stage 2 | $0.08B | $0.04B | $0.29B |
| Year 8 | Stage 2 | $0.08B | $0.04B | $0.33B |
| Year 9 | Stage 2 | $0.09B | $0.03B | $0.36B |
| Year 10 | Stage 2 | $0.09B | $0.03B | $0.40B |
| Terminal | — | TV=$1.2B | PV(TV)=$0.5B (54% of EV) | EV=$0.9B |
| Intrinsic Value | — | — | EV $0.9B − Net Debt → Equity / Shares | $33 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (10.50%) to get its present value. After Year 10, FCF grows at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $1.2B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $0.5B). Enterprise Value = PV of FCFs ($0.4B) + PV of TV ($0.5B) = $0.9B. Subtracting net debt gives equity value of $0.9B, divided by shares outstanding = $33 per share.
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $29 | $31 | $32 | $34 | $36 |
| 9.0% | $27 | $28 | $30 | $31 | $33 |
| 9.5% | $26 | $27 | $28 | $29 | $30 |
| 10.0% | $24 | $25 | $26 | $27 | $28 |
| 10.5% | $23 | $23 | $24 | $25 | $26 |
| 11.0% | $22 | $22 | $23 | $23 | $24 |
| 11.5% | $20 | $21 | $21 | $22 | $23 |
| 12.0% | $19 | $20 | $20 | $21 | $21 |
| 12.5% | $19 | $19 | $19 | $20 | $20 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $1.560 |
| Current Yield | 7.12% |
| Consecutive Growth Years | 5 |
| 1-yr DPS CAGR | +6.1% |
| 3-yr DPS CAGR | +5.7% |
| 5-yr DPS CAGR | +10.0% |
| 10-yr DPS CAGR | — |
| Payout Ratio (DPS/EPS) | 77.6% ⚠️ |
| FCF Payout Ratio | 81.0% ⚠️ |
| Sustainability Verdict | Watch |
Payout ratio has risen to ~78% (EPS basis) and ~81% (FCF basis) as earnings compressed. The dividend is currently funded by strong free cash flow and the net cash balance sheet, but further revenue declines could force management to revisit the DPS level. ETD historically has been willing to hold the dividend through downturns (maintained through COVID peak/trough). Verdict: Watch — not at immediate risk, but warrants monitoring if EPS falls below $1.80.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $2.37 | — | — | — | Actual |
| 2022 | $4.05 | — | — | — | Actual |
| 2023 | $4.13 | — | — | — | Actual |
| 2024 | $2.49 | — | — | — | Actual |
| 2025 | $2.01 | — | — | — | Actual |
| 2026 | $1.47 | $1.58 | $1.70 | 3 | Estimate |
| 2027 | $1.67 | $1.77 | $1.89 | 3 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $0.7B | — | — | — | Actual |
| 2022 | $0.8B | — | — | — | Actual |
| 2023 | $0.8B | — | — | — | Actual |
| 2024 | $0.6B | — | — | — | Actual |
| 2025 | $0.6B | — | — | — | Actual |
| 2026 | $0.6B | $0.6B | $0.6B | 3 | Estimate |
| 2027 | $0.6B | $0.6B | $0.6B | 3 | Estimate |
(c) Individual Analyst Price Targets
Consensus: Avg $27.00 | Range $27–$27
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Cristina Fernandez | Telsey Advisory Group | Hold | $27 | +23.3% |
(d) Earnings Surprise History
| Quarter | EPS Act vs Est | EPS Beat/Miss | Rev Act vs Est | Rev Beat/Miss | Guidance |
|---|---|---|---|---|---|
| Q2 FY2025 (Dec) | $0.45 vs $0.50 | $-0.05 ❌ | $0.1B vs $0.1B | $-0.0B ❌ | Cautious — housing soft |
| Q1 FY2025 (Sep) | $0.49 vs $0.52 | $-0.03 ❌ | $0.1B vs $0.2B | $-0.0B ❌ | Maintained dividend |
| Q4 FY2024 (Jun) | $0.54 vs $0.57 | $-0.03 ❌ | $0.2B vs $0.2B | $-0.0B ❌ | Revenue headwinds persist |
| Q3 FY2024 (Mar) | $0.59 vs $0.60 | $-0.01 ❌ | $0.2B vs $0.2B | $-0.0B ❌ | Stable operations |
(e) Confidence Band Commentary
Only 1 analyst actively covers ETD (Telsey Advisory, Hold, PT $27). Low analyst coverage means forecasts carry wide uncertainty and can lag actual results significantly. Revenue trajectory is heavily dependent on the US housing market cycle — hard to model precisely. Our scenarios bracket the plausible range; Base assumes revenue bottoming in FY2026 at ~$596M, consistent with analyst consensus. DPS stability is the primary investment consideration.
💡 Investment Thesis
- Net cash balance sheet: ETD holds ~$136M in cash/investments with minimal debt (~$124M lease obligations), providing a ~$0.47/share net cash cushion and dividend safety through the downturn.
- 75% domestic manufacturing: Near-shoring/tariff-resilience story — competitors more exposed to Asian import disruption from potential tariff escalation.
- Housing recovery optionality: When mortgage rates decline and housing turnover recovers, ETD has historically seen rapid order acceleration — revenue could return to $700M+ within 2 years of a recovery.
- Deep discount to book value: Trading at ~1.17x book ($18.82 BVPS) with $27 analyst PT — limited downside if dividend is maintained and balance sheet held intact.
⚖️ DCF Verdict: Hold — Ethan Allen Interiors Inc. (ETD)
Current price: $21.90 | Analyst Avg PT: $27.00
$15
🔴 Bear
$24
📊 Base
$33
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$22 | Begin position |
| Tier 2 — Add | ≤$19 | Add on weakness |
| Tier 3 — Full | ≤$15 | Full allocation |
| Sell Alert | ≥$28 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Hold ETD at current prices (~$22). The Base DDM intrinsic value reflects the compressed earnings environment and implies limited near-term upside. The single analyst PT of $27 (+23%) is achievable only if revenue stabilizes and margin recovers. Best entry would be $18–20 (near book value) if housing data deteriorates further; not a buy at current prices given no near-term catalyst.
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Model Selection | DDM chosen over DCF: ETD pays a consistent, meaningful dividend (7%+ yield) and management has maintained DPS through prior downturns. DDM captures the income value directly. |
| Ke | Ke = 9.79% (β~1.02 for small-cap furniture retailer, Rf=4.3%, ERP=5.5%). Higher than EPD/ENB — appropriate for cyclical small-cap with housing sensitivity. |
| Bear DPS | Bear scenario assumes DPS cut from $1.56 to ~$1.20 in Stage 1 if housing downturn deepens. FCF payout currently 81% — a 10% revenue drop would pressure further. |
| Fiscal Year | ETD fiscal year ends June 30. FY2025 = Jul 2024–Jun 2025. FY2026 forecast reflects Jul 2025–Jun 2026 period. |
| Sanity Check | Base IV should be near analyst PT $27. If base lands outside ±20% ($21.6–$32.4), revisit Ke or g assumptions. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.