Yahoo Finance Bull of the Day: LaZBoy (LZB)
La-Z-Boy (LZB) is a Zack Rank #1 (Strong Buy) that is one of the world's leading residential furniture producers, marketing furniture for every room of the home.
The La-Z-Boy brand is a household name synonymous with comfort and quality, which has recently reported its Q4 results. The quarter highlighted its resilient performance and strategic outlook despite a challenging macroeconomic environment.
For investors eyeing opportunities in the home furnishings sector, La-Z-Boy stands out with its solid execution and forward-thinking strategies.
About the Company
La-Z-Boy was founded in 1927, has a market cap of $1.6 billion, and employs over 10,000.
The company operates through its Wholesale and Retail segments. The Wholesale segment manufactures and imports a range of upholstered and wooden furniture, distributing these products to La-Z-Boy Furniture Galleries, Comfort Studio locations, and other retailers. Meanwhile, the Retail segment sells these products directly to consumers through its own stores and e-commerce platform Joybird, which also specializes in custom upholstered furniture.
The stock has a Zacks Style Score of “A” in Value and Momentum. It sports a Style Score of “C” in Growth and has a Forward PE of 12.
Q1 Earnings
On June 17th, LZB reported a 40% EPS beat for Q4 earnings. The company saw earnings of $0.95 per share, just shy of last year's $0.99 per share. Similarly, revenues were $554 million, slightly below the $561 million reported in the same quarter last year.
While these y/y figures might suggest a slowdown, a deeper dive reveals a more robust underlying performance. A key factor to consider is the impact of the $300 million backlog in delivered sales from FY2023, which if adjusted for, places La-Z-Boy’s sales performance on par with the previous year. This adjustment underscores the company’s ability to maintain steady sales in a volatile market.
For the first quarter of Fiscal 2025, La-Z-Boy expects delivered sales between $475 million and $495 million, with a non-GAAP operating margin in the range of 6-7%. While the first quarter is typically the slowest due to seasonality and the company's annual plant shutdown, La-Z-Boy’s guidance reflects a disciplined approach to managing expectations and preparing for seasonal variations.
Looking forward, La-Z-Boy’s “Century Vision” strategy is poised to drive growth and strengthen its market position. The plan includes opening 12 to 15 new La-Z-Boy Furniture Galleries stores in the second half of Fiscal 2025, which is expected to boost sales and expand market reach.
Estimates Rising
Earnings estimates are trending higher since reporting EPS, with analysts focusing on earnings growth over the next year.
Over the last 7 days, estimates for the current quarter have gone up by only 3%, from $0.60 to $0.62.
However, for the current year analysts have taken numbers from $2.80 to $3.13. This is a 12% move higher over the last 7 days.
For next year we see a similar trend, with estimates going up over 14% for that same timeframe, moving from $2.95 to $3.37.
The Technical Take
Before earnings the stock was trading near 2024 lows, clinging to the 200-day MA at $34. The earnings release brought in aggressive buying, taking the stock up to $41 overnight.
However, the stock has pulled back since that initial move, and investors should be watching for support levels to enter.
The halfway back mark, or 50% retracement from the earnings move is $37.25. The 61.8% retracement is $36.40, which is lined up with the 21-day MA.
Investors could eye the $36.40-$37 “buy zone” for entry points and risk a move below the 200-day MA at $34.50.
In Summary
La-Z-Boy’s strategic vision, combined with its operational resilience and market outperformance, makes it a compelling choice for investors. The company’s proactive approach to navigating industry challenges and its commitment to expanding its retail footprint position it well for future growth.
For investors seeking stability and potential growth in the home furnishings sector, La-Z-Boy represents a solid opportunity.
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La-Z-Boy Incorporated (LZB) : Free Stock Analysis Report
