If you can cut your way through the raft of one-time charges for this year and last, Motley Fool Income Investor pick La-Z-Boy
For the quarter, La-Z-Boy turned in income from continuing operations of $0.35 per share, vs. last year's loss of $0.64 per share. Annual income from continuing operations was $0.63 vs. last year's $0.04.
The furniture industry as a whole has taken a big hit over the past six to 12 months, and La-Z-Boy is no exception. With low-cost goods pouring in from China and other parts of Asia, coupled with rising inventories and stagnant sales, investors' worries were not unfounded. However, I happen to believe they're overblown.
The real deal for La-Z-Boy, and others in the furniture industry such as Furniture Brands
At La-Z-Boy, the restructuring charges have masked this cash profitability lately, but in the most recent quarter, trailing free cash flow was a robust $24.3 million, vs. last year's weak $7.5 million. One quarter's free cash flow doesn't make a trend, and the free cash flow for the year is still pretty weak. But with the business restructured and refocused on its core consumer market, it's likely to return to previous levels of free cash flow.
In the meantime, investors get a company with a solid balance sheet, a commitment to reducing its debt, share repurchases, and a juicy 3.2% dividend yield. That dividend was a bit larger just a month or so ago, but it's still a strong yield for a company that, at current prices, appears to offer a market-beating return on its shares as well.
Sit back and recline with some more La-Z-Boy Foolishness:
Since the inception of Motley Fool Income Investor , lead analyst Mathew Emmert has beaten the market handily -- a 14.89% return vs. the S&P 500's 8.82%. Sign up today to try an Income Investor subscription risk-free for 30 days.