Don’t Sleep on La-Z-Boy

In Monday’s Guide, we alluded to a sleepy sideways stock market with a great image of Sleepy dwarf. We think things will pick up, particularly since political certainty is less than a week away. On a lighter note, this World Series has been the most exciting in recent memories, if not merely for the two franchises in it, both of whom have suffered decades of futility. While we are talking about sleep, coincidentally, the Indians’ first baseman, Mike Napoli, underwent surgery to correct sleep apnea a year ago. A common problem that many people ignore, but we digress…

Speaking of rest and relaxation, La-Z-Boy Incorporated (NYSE – LZB - $22.75) is a stock we began to cover nearly two years ago in the Market Monitor. Below is the one year chart that illustrates that LZB may be reaching a buying point in a trough per a head-and-shoulders technical measure.

LZB 1-Year

(Source: www.otcmarkets.com)

La-Z-Boy is a household name, particularly when it comes to making recliners custom unwind and watch great sporting events like the World Series. The Company manufactures, markets, imports, exports, distributes, and retails upholstery furniture products, accessories, and casegoods furniture products in the United States, Canada, and internationally. The Company also produces reclining chairs; and manufactures and distributes residential furniture in the United States. It operates through Upholstery, Casegoods, and Retail segments. The Upholstery segment manufactures or imports upholstered furniture, such as recliners and motion furniture, sofas, loveseats, chairs, sectionals, modulars, ottomans, and sleeper sofas. This segment sells its products directly to La-Z-Boy Furniture Galleries stores, operators of Comfort Studios and England custom comfort center locations, dealers, and other independent retailers. The Casegoods segment manufactures, imports, markets, and distributes casegoods furniture, including bedroom sets, dining room sets, entertainment centers and occasional pieces, and upholstered furniture. This segment sells its products to dealers, La-Z-Boy Furniture Galleries stores, and other independent retailers under the American Drew, Hammary, and Kincaid brand names. The Retail segment sells upholstered furniture, casegoods, and other accessories to the end consumer through its retail network.

EPS performance has been even more paramount in pops over the last several quarters. La-Z-Boy has hit or surpassed estimates two of the last four quarters. On the technical front a short float of 4% indicates strong conviction for the longs. Additionally, the Company has $132 million cash on hand with only $714 thousand in debt as of the end of 2Q16. Finally, profit margin of 5% and operating margin of 8% are both 1% higher than the industry averages respectively.

LZB remains a strong long term buy and hold. Wall Street Analysts’ consensus forecast 4.5% revenue growth for 2017. We like a $26 target in 2Q17.

Have a great day!

Goldman Small Cap Research is not affiliated in any way with Goldman Sachs & Co.

It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. Please view the company’s individual disclosures for each engagement, which can be found in each company-specific report. All information contained in this blog, newsletter and in our reports were provided by the Companies or generated from our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations.

The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small Cap Research blog, report, note, or newsletter is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed.

This blog does not take into account the investment objectives, financial situation, or particular needs of any particular person. This blog does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with FINRA or with any state securities regulatory authority.

ALL INFORMATION IN THIS BLOG, REPORT OR NEWSLETTER IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THIS INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.

For more information, visit our Disclaimer: www.goldmanresearch.com