Opinions
Gordon Reid
La-Z-Boy Inc.
LZB-N
STRONG BUY
Dec 19, 2016
$27.900
Stock price when the opinion was issued
Consumer Products
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TOP PICK
A company that has stayed up with the times. It is a derivative play on home builders. People will be buying more furniture. It trades at a 15x 2021 estimates. They are building their e-commerce offering. There is a lot of demand for furnishing that they will profit from. (Analysts’ price target is $41.00)
Consumer Products
TOP PICK
Stockchase Research Editor: Michael O'Reilly Recently reported earnings showed sales rebounding, revenue growth and a positive outlook from management -- meeting, but not beating analyst expectations. Management expects sales growth exceeding 30% next quarter, compared to the pandemic impact a year ago. Cash flow is estimated to have increased by over $230 million over the year and with virtually no debt the company is well positioned. It pays a decent dividend, backed by a 21% payout ratio. We would buy this with a stop-loss at $29, looking to achieve $47.50 -- upside of 25%. Yield 1.59% (Analysts’ price target is $47.50)
Consumer Products
TOP PICK
Stockchase Research Editor: Michael O'Reilly LZB recently reported earnings that easily exceeded analyst expectations. Backlog orders suggest they will be at full production capacity for several quarters yet. All their business segments are reporting record demand levels allowing margins to expand. The company has reinstated the dividend and has a payout ratio under 30% of cash flow. They are currently trading at 23x earnings, compared to peers at 40x. We would buy this with a stop loss at $30, looking to achieve $50 -- upside over 36%. Yield 1.00% (Analysts’ price target is $50.00)
Consumer Products
TOP PICK
Stockchase Research Editor: Michael O'Reilly We reiterate our TOP PICK recommendation of LZB. Recently reported earnings indicate demand growth for their products, which picked up smartly during the pandemic, continues unabated. The company has focused on expanding capacity and efficiency of its supply chain. Margins are expanding and there are healthy order backlogs. It pays a nice dividend, backed by a payout ratio projected at under 25% of cash flow. We would buy this with a stop loss at $30, looking to achieve $50 -- upside potential over 44%. Yield 1.75% (Analysts’ price target is $50.00)
Consumer Products
TOP PICK
Stockchase Research Editor: Michael O'Reilly We again reiterate LZB as our TOP PICK. Recently reported earnings beat analyst expectations by 16% and it is managing a respectable ROE of 17%. It trades at 13x earnings compared to peers at 17x and is valued at just over 2x book. It pays a nice dividend, backed by a payout ratio at under 25% of cash flow. We continue to recommend a stop loss at $30, looking to achieve $52.50 -- upside potential over 40%. Yield 1.83% (Analysts’ price target is $52.50)
Consumer Products
PAST TOP PICK
(A Top Pick Dec 30/21, Down 17.3%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with LZB has triggered its stop at $30. To remain disciplined, we recommend covering the position at this time. This results in a net investment loss of 18% when considering our previous buy recommendation.
Consumer Products
TOP PICK
Average US house price is down only 3% from highs. Homebuilders are getting through this downturn quite nicely, and the homebuilders index is hitting 52-week highs. LZB will benefit. Less than 10x earnings, solid dividend, revenue will do well coming off supply chain issues. Yield is 2.56%.
(Analysts’ price target is $43.00)
Consumer Products
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He likes it from a macro point of view. From a company specific point of view they are doing good things. They want to grow their business by 400 stores in 5 years. Their margins are improving from 2.5% to 5% and he thinks they are on the way to 7%.