Back to top

Image: Bigstock

Should Value Investors Buy La-Z-Boy (LZB) Stock?

Read MoreHide Full Article

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is La-Z-Boy (LZB). LZB is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 13.50 right now. For comparison, its industry sports an average P/E of 17.18. Over the last 12 months, LZB's Forward P/E has been as high as 15.89 and as low as 12.17, with a median of 13.69.

Another notable valuation metric for LZB is its P/B ratio of 2.14. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 4.09. Over the past year, LZB's P/B has been as high as 2.50 and as low as 1.96, with a median of 2.16.

These figures are just a handful of the metrics value investors tend to look at, but they help show that La-Z-Boy is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, LZB feels like a great value stock at the moment.

Published in