Why La-Z-Boy Shares Popped

Is this meaningful? Or just another movement?

Brian D. Pacampara, CFA
Brian D. Pacampara, CFA
Feb 20, 2013 at 4:50PM
Consumer Goods

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of furniture maker La-Z-Boy (NYSE:LZB) climbed 14% today after its quarterly results easily topped Wall Street expectations.

So what: The stock has been extremely volatile over the past year on worries over sluggish consumer spending, but a wide third-quarter beat -- EPS of $0.32 on revenue of $349.1 million versus the consensus of $0.23 and $337.8 million -- naturally eases some of those concerns. In fact, gross margin widened to 32.5% from 31.5% in the year-ago period, with same-store sales also growing a solid 12%, giving investors plenty of optimism over profitable growth going forward.

Now what: Expect the operating momentum to continue. "We are quite pleased with the trends we are seeing in our business," said Chairman and CEO Kurt Darrow. "The improving housing market, coupled with what is historically our strongest volume period, makes us cautiously optimistic as we move into the fourth quarter." Of course, with the stock now up about 65% from its 52-week lows and trading at a forward P/E of 20, Fools might want to wait for a larger margin of safety before buying into that bull talk.

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