| La-Z-Boy Incorporated is the third largest furniture maker in the U.S., the largest reclining-chair manufacturer in the world and America's largest manufacturer of upholstered furniture. The company was founded in 1927 and is based in Monroe, Michigan. The company has a $1.3 Billion market cap with a forward P/E of 17. It sports a Zacks Style Score of “A” in Growth and “B” in value and has a VGM score of “A”. La-Z-Boy pays a dividend of 1.53% and expected EPS growth of 17.5%. |  |
Over the last 60 days, analysts have revised current fiscal year estimates 2.5% higher, from $1.55 to $1.59. If the company can beat again it should break out of this recent range it has been stuck in over the last year. La-Z-Boy will go for its fifth straight positive EPS surprise next quarter on June 21st.
La-Z-Boy Incorporated manufactures, markets, imports, 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 in three segments: Upholstery, Casegoods, and Retail. 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. La-Z-Boy Incorporated sells its products through a network of 325 La-Z-Boy Furniture Galleries stores and 576 Comfort Studio locations, as well as in-store gallery programs for its Kincaid and England operating units. The company was formerly known as La-Z-Boy Chair Company and changed its name to La-Z-Boy Incorporated in 1996. La-Z-Boy Incorporated was founded in 1927 and is based in Monroe, Michigan.
(Summary) (Company) (Chart)
| 10 April 2016 Price $25.81 1yr Target $30.17 Analysts 6 Dividend $0.40 Payout Ratio 26.84% 1yr Cap Gain 16.89% Yield 1.54% 1yr Tot Return 18.43% P/E 17.35 PEG 0.99 Beta 1.39 | EPS (ttm) $1.49 EPS next yr $1.74 EPS next 5yr 17.50% 1yr Price Support $30.45 Market Cap $1.29 Bil Revenues $1.48 Bil Earnings $79.00 Mil Profit Margin 6.12% Quick Ratio 1.90 Current Ratio 3.10 Debt/Equity 0.00 | 1yr RevGR 5.01% 3yr RevGR 6.84% 5yr RevGR 3.86% 1yr EarnGR 32.35% 3yr EarnGR -18.30% 5yr EarnGR 16.66% 1yr DivGR 26.66% 3yr DivGR 33.03% 5yr DivGR --- ROA 9.80% ROE 14.40% |
La-Z-Boy furniture is sold in thousands of retail residential outlets in the United States and Canada and is manufactured and distributed under license in other countries including the United Kingdom, Germany Indonesia, Italy, Japan Mexico, New Zealand, Turkey, and South Africa. La-Z-Boy holds US and international patents on more than 200 different styles and mechanisms.
La-Z-Boy Incorporated is divided into three reportable operating segments: the Upholstery Group, the Casegoods Group and the Retail Group. The Upholstery Group primarily manufactures and sells upholstered furniture to furniture retailers and proprietary stores. This includes recliners and motion furniture, sofas, loveseats, chairs, ottomans and sleeper sofas. The Casegoods Group primarily sells manufactured or imported wood furniture to furniture retailers, including tables, chairs, entertainment centers, headboards, dressers, accent pieces and some coordinated upholstered furniture. The Retail Group consists of 70 company-owned stores in the US. The Retail Group sells mainly upholstered furniture to end consumers through the retail network.
La-Z-Boy includes various companies and brands including La-Z-Boy Residential, La-Z-Boy Kids, La-Z-Boy Hospitality, Lea Furniture, American Drew, Kincaid Furniture, Bauhaus USA Furniture, Hammary Furniture and England Furniture Incorporated.
La-Z-Boy Incorporated is divided into three reportable operating segments: the Upholstery Group, the Casegoods Group and the Retail Group. The Upholstery Group primarily manufactures and sells upholstered furniture to furniture retailers and proprietary stores. This includes recliners and motion furniture, sofas, loveseats, chairs, ottomans and sleeper sofas. The Casegoods Group primarily sells manufactured or imported wood furniture to furniture retailers, including tables, chairs, entertainment centers, headboards, dressers, accent pieces and some coordinated upholstered furniture. The Retail Group consists of 70 company-owned stores in the US. The Retail Group sells mainly upholstered furniture to end consumers through the retail network.
La-Z-Boy includes various companies and brands including La-Z-Boy Residential, La-Z-Boy Kids, La-Z-Boy Hospitality, Lea Furniture, American Drew, Kincaid Furniture, Bauhaus USA Furniture, Hammary Furniture and England Furniture Incorporated.
My Perspective
| La-Z-Boy Inc. has been increasing its revenues over the last 5 years while at the same time increasing its operating margin. These kinds of efforts by management often result in increasing earnings over time. In the case of La-Z-Boy, earnings are estimated to increase over 25% in FY16 and then another 10% in FY17 as a direct result of revenues increases. |  |
As revenues increased, La-Z-Boy restrained their operating costs causing an increase in their overall operating margins from 2.1% to 7.2% between FY2011 and FY2015. The company has also embarked on efforts to reduce their overall debt as can be seen in the following chart.
 | This reduction of corporate debt has allowed the company to significantly increase their cash position available for programs that can benefit their shareholders. As can be seen in the third chart below, the company has both increased the amount of money available for share repurchase and for dividend increases. This is the kind of information that Dividend Growth Investors like to see. |
| I believe that La-Z-Boy is fully priced at in the mid $20s and I believe it could easily rise to its estimated one year price of $30 within the next 12 -15 months. I also believe that with a beta of 1.39, this stock could possible be bought a couple of dollars lower than it current price. But with earnings estimated to increase 17.5% annually for the next 5 years, this stock end up being near $60 per share and paying a dividend near $0.90 annually. |  |
Based on that alone, I expect to start a position in La-Z-Boy on any pullback to $25 or $24 per share with the intent to add to that position as long as the P/E ratio remains below 17.5 and the PEG remains below 1. I intend to add to that position over time through reinvestment of dividends, through the sale of call options, and through the open market purchase of additional sales at opportune times.
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