Getting Comfortable with LZB Fundamentals Before Earnings

La-Z-Boy will report earnings on Tuesday, June 15

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American furniture manufacturer La-Z-Boy Incorporated (NYSE:LZB) is up nearly 60% in the last 12 months, with pullbacks finding support at the shares' 160-day moving average.  La-Z-Boy stock also has a forward dividend $0.60 and a dividend yield of 1.39%.

La-Z-Boy will report fourth-quarter earnings after the close on Tuesday, June 15. LZB has outperformed analysts' earnings expectations on all four of its most recent earnings reports. However, only two of the post-earnings reactions were positive; a 3% gain in November and a 2.8% pop back in August. Overall, LZB averages a post-earnings move of 5%, regardless of direction, in the last eight reports.

LZB Stock Chart

La-Z-Boy has undoubtedly been affected negatively by the COVID-19 pandemic, with revenues dropping by 9.4% and net income decreasing by 6% since fiscal 2019. However, La-Z-Boy’s issues on the bottom-line pre-date the pandemic so its unlikely all will be resolved as the pandemic woes fade. Between fiscal 2018 and fiscal 2019, La-Z-Boy’s net income had decreased by roughly 15%, making LZB's fundamentals seem less stable and its valuation a lot less attractive. In general, it is difficult to justify LZB’s high price-earnings ratio of 27.89. However, the company does hold $410.55 million in cash and just $355.82 million in total debt on its balance sheet, allowing La-Z-Boy stock to be a potential recovery play.

 

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