Rapid urbanization and the growing demand for modern, smart homes are key drivers of the home improvement market. As cities grow and the standard of living improves, there is a greater demand for homes incorporating cutting-edge technology and modern design. The home improvement market is poised to grow at a CAGR of 6.7% by 2032.

Additionally, in the home improvement market, the wave in interest for DIY projects has been noteworthy. Homeowners are increasingly focusing on personalizing their living spaces through DIY initiatives. The U.S. DIY home improvement market is forecast to grow at a CAGR of 3.7% by 2029.

Against this backdrop, let’s compare two established home improvement stocks to analyze which one is a smarter buy: Steelcase Inc. (SCS) and La-Z-Boy Incorporated (LZB).

The Case for Steelcase Inc. stock

Valued at $1.33 billion by market cap, Steelcase Inc. (SCS) provides a portfolio of furniture and architectural products and services in the United States and internationally. It operates through Americas and International segments.

SCS has gained 1.3% intra-day months to close the last trading session at $11.68.

In terms of the trailing-12-month gross profit margin, SCS’ 33.3% is 4.7% higher than the 31.77% industry average. Likewise, its 7.24% trailing-12-month levered FCF margin is 5.5% higher than the industry average of 6.86%.

In the fiscal third quarter that ended on November 22, 2024, SCS’s revenue increased 2.2% year-over-year and amounted to $794.90 million. The company reported an operating income of $41 million, while its gross profit grew 5.2% from the prior-year quarter to $165.40 million. Its attributable net income came in at $19.10 million.

Street expects SCS’ revenue for the fiscal fourth quarter (ending February 2025) to increase 2% year-over-year to $790.90 billion. Its EPS for the same period is expected to be $0.21. In addition, it surpassed the EPS estimates in each of the trailing four quarters, which is promising.

SCS’ POWR Ratings reflect solid prospects. It has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

SCS is ranked first out of 57 stocks in the Home Improvement & Goods industry. It has an A grade for Value and Sentiment and a B for Growth and Quality. To see SCS’s Momentum and Stability ratings, click here.

The Case for La-Z-Boy Incorporated Stock

Valued at $1.88 billion by market cap, La-Z-Boy Incorporated (LZB) markets, imports, exports, distributes, and retails upholstery furniture products in the United States, Canada, and internationally. It operates through Wholesale and Retail segments. 

LZB has gained 36.8% over the past nine months to close the last trading session at $45.28.

In terms of the trailing-12-month gross profit margin, LZB’s 43.37% is 15.5% higher than the 37.55% industry average. However, its 7.51% trailing-12-month EBIT margin is 7.3% lower than the industry average of 8.11%.

LZB’s sales for the second quarter that ended October 26, 2024, were reported at $521.03 million. However, the company’s non-GAAP net income and non-GAAP earnings per share declined 6% and 4% year-over-year to $30.23 million and $0.71, respectively.

Street expects LZB’s revenue for the third quarter ending January 2025 to increase 3.2% year-over-year to $516.47 million. However, the company’s EPS for the same quarter is expected to decline marginally year-over-year to $0.67. Moreover, the company surpassed consensus revenue and EPS estimates in three of the trailing four quarters.

LZB’s mixed fundamentals are reflected in its POWR Ratings. The stock has an overall C rating, translating to Neutral in our proprietary rating system.

LZB has a C grade in Value, Momentum, Stability, Sentiment, and Growth. It is ranked #24 in the same industry.

Click here for the additional POWR Ratings for LZB (Quality).

Steelcase Inc. (SCS) vs. La-Z-Boy Incorporated (LZB): Which Home Improvement Stock Is a Smarter Buy?

The home improvement industry is expected to see steady growth driven by increased demand for remodeling and renovation projects. Trends include a focus on energy efficiency, sustainability, and smart home technology.

Leading home-improvement companies, such as SCS and LZB, stand to capitalize on the optimistic industry outlook. However, SCS’ higher profitability and promising near-term outlook favor it as the better stock pick.

Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Home Improvement & Goods industry here.

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LZB shares were trading at $45.67 per share on Tuesday afternoon, up $0.39 (+0.86%). Year-to-date, LZB has gained 4.82%, versus a 3.21% rise in the benchmark S&P 500 index during the same period.

About the Author: Nidhi Agarwal

Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...

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