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La-Z-Boy Inc (LZB - Free Report) is a Zacks Rank #5 (Strong Sell) that is one of the leading residential furniture producers and marketers. The company sells all types of furniture including sofa, recliners, chairs, loveseats and more.
The stock had a nice run higher after a series of earnings beats. However, estimates are falling, so investors should be on the lookout for a pullback as the stock breaks all-time highs.
More about LZB
La-Z-Boy is headquartered in Monroe, Michigan and employs over 9,000.The company is valued around $2 billion and has a PE of 18. LZB has Zacks Style Scores of “A” in Growth and “B” in Value. The company even pays a dividend of 1.34%.
Things have been clicking for the company during the pandemic as people looked to furnish their home. But did the recent quarter spook some analysts?
Q3 Earnings
LZB reported earnings back in February, seeing a 4% EPS beat. The company saw revenues of $241.3M v the $213.8M the year before. The company gave no guidance, but said that the consumer “nesting" continues, which is driving record demand for home furnishings. The store and internet traffic are rising and sales across all furniture categories have been strong.
This was great news to shareholders and after the stock gapped lower on the headline EPS number, it is since up over 25% from those lows.
However, analyst see something they don’t like and perhaps a reopening of the economy might affect futures revenues. After all, how many sofas and recliners can one buy within a two- or three-year-time horizon.
Estimates
Over the last two months, we see evidence that analysts are starting to drop their expectations for the company. For the current quarter, estimates have fallen from $0.90 to $0.75, or 16%. And for the current year, we have see estimates fall from $2.73 to $2.50, or 8%
The issue may lie with supply chains problems. So as demand remains strong, the company might be missing out on a lot of revenues. And once we move pass stimulus checks, investors will have to ask themselves if they believe demand will remain.
A Complacent Bull?
The capacity dynamic doesn’t benefit the company. Additionally, the company will see a CEO transition in April.
While the cLZB is growing, there is increasing competition and supply chain risk. Investors might be wise to avoid current levels and wait for larger pullbacks like we saw in the earnings number.
The Technicals
The moving averages are all rising, with the 50-day just under $42. A larger pullback could see a test of the 200-day MA at $35.50. Longer term support would be the $28-31 area, where Fibonacci levels reside, drawn from the March 2020 lows to January highs.
In Summary
La-Z-Boy is looking a little overbought despite being so close to all-time highs. The stock is due for another pullback if the risks mentioned above come to fruition. Current investors have to decide is the smaller upside is worth the larger downside that may come if estimates keep falling.
For those interested in the space consider Lovesac (LOVE - Free Report) , which is a Zacks Rank #2 (Buy).
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Bear of the Day: La-Z-Boy Inc (LZB)
La-Z-Boy Inc (LZB - Free Report) is a Zacks Rank #5 (Strong Sell) that is one of the leading residential furniture producers and marketers. The company sells all types of furniture including sofa, recliners, chairs, loveseats and more.
The stock had a nice run higher after a series of earnings beats. However, estimates are falling, so investors should be on the lookout for a pullback as the stock breaks all-time highs.
More about LZB
La-Z-Boy is headquartered in Monroe, Michigan and employs over 9,000.The company is valued around $2 billion and has a PE of 18. LZB has Zacks Style Scores of “A” in Growth and “B” in Value. The company even pays a dividend of 1.34%.
Things have been clicking for the company during the pandemic as people looked to furnish their home. But did the recent quarter spook some analysts?
Q3 Earnings
LZB reported earnings back in February, seeing a 4% EPS beat. The company saw revenues of $241.3M v the $213.8M the year before. The company gave no guidance, but said that the consumer “nesting" continues, which is driving record demand for home furnishings. The store and internet traffic are rising and sales across all furniture categories have been strong.
This was great news to shareholders and after the stock gapped lower on the headline EPS number, it is since up over 25% from those lows.
However, analyst see something they don’t like and perhaps a reopening of the economy might affect futures revenues. After all, how many sofas and recliners can one buy within a two- or three-year-time horizon.
Estimates
Over the last two months, we see evidence that analysts are starting to drop their expectations for the company. For the current quarter, estimates have fallen from $0.90 to $0.75, or 16%. And for the current year, we have see estimates fall from $2.73 to $2.50, or 8%
The issue may lie with supply chains problems. So as demand remains strong, the company might be missing out on a lot of revenues. And once we move pass stimulus checks, investors will have to ask themselves if they believe demand will remain.
A Complacent Bull?
The capacity dynamic doesn’t benefit the company. Additionally, the company will see a CEO transition in April.
While the cLZB is growing, there is increasing competition and supply chain risk. Investors might be wise to avoid current levels and wait for larger pullbacks like we saw in the earnings number.
The Technicals
The moving averages are all rising, with the 50-day just under $42. A larger pullback could see a test of the 200-day MA at $35.50. Longer term support would be the $28-31 area, where Fibonacci levels reside, drawn from the March 2020 lows to January highs.
In Summary
La-Z-Boy is looking a little overbought despite being so close to all-time highs. The stock is due for another pullback if the risks mentioned above come to fruition. Current investors have to decide is the smaller upside is worth the larger downside that may come if estimates keep falling.
For those interested in the space consider Lovesac (LOVE - Free Report) , which is a Zacks Rank #2 (Buy).
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
AccessZacks Top 10 Stocks for 2021 today >>