Shares of La-Z-Boy (LZB) are up nearly 18% so far Tuesday morning on the heels of its fiscal fourth-quarter results and preliminary first-quarter guidance. The furniture company’s results for the quarter ending April 27th surpassed analyst expectations on both the top and bottom lines. 

Adjusted earnings came in at $0.95 per share ahead of the $0.70 per share consensus. This was down slightly from $0.99 per share this time last year, though. Meanwhile, sales of $553.5 million represented a 1.4% decrease year over year, but again – surpassed the consensus of $516.5 million.

Part of the challenge for La-Z-Boy this quarter was lower traffic as high interest rates are discouraging housing activity. This led to a 3% dip in same-store sales year-over-year. 

The company has been bleeding profitability, with an adjusted operating margin of 9.4% (40 basis points lower) for the fourth quarter and down to 7.8% for the full year (170 basis points lower). Gross margin for Q4 took the biggest hit at just 43.4% (280 basis points lower).

CEO Melinda Whittington says that she expects this industry volatility to persist in the short term. However, the long-term view is more optimistic. Whittington believes the company will continue to deliver better results than the market and gain share.

That being said, the company has guided for sales to come in the range of $475 to $495 million for the first quarter of the current fiscal year, which is quite a step backward from the previous quarter’s performance. At the top end of that range, though, La-Z-Boy will still beat the consensus estimate of $475.65 million.

LZB has been rallying in the right direction for some time now, up 47% in the past year and more than 18% today so far. So, should you buy this stock? We’ve taken a look through the VectorVest stocks software and found 3 things to help you make your next move with complete confidence and clarity.

LZB Has Poor Upside Potential But Fair Safety and Very Good Timing Earn it a BUY

VectorVest is a proprietary stock rating system that boils down complex technical data into easy-to-understand indicators to save you time and stress while empowering you to win more trades. 

It’s all based on 3 simple ratings: relative value (RV), relative safety (RS), and relative timing (RT). Each sits on a scale of 0.00-2.00 with 1.00 being the average, allowing for quick and easy interpretation.

It gets even better, though. The system issues a buy, sell, or hold recommendation for any given stock at any given time based on its overall VST rating. Here’s what you need to know for LZB:

  • Poor Upside Potential: The RV rating is a far superior indicator than the typical comparison of price to value alone, as it compares a stock’s long-term price appreciation potential (forecasted 3 years out), AAA corporate bond rates, and risk. LZB has a poor RV rating of 0.75.
  • Fair Safety: The RS rating is a risk indicator. It’s calculated through an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. LZB has a fair RS rating of 1.02. 
  • Very Good Timing: The RT rating is based on the direction, dynamics, and magnitude of the stock’s price movement. It’s calculated day over day, week over week, quarter over quarter, and year over year, painting the full picture of a stock’s price trend. LZB has a very good RT rating of 1.39 reflecting its performance over the past year.

The overall VST rating of 1.12 is good for LZB and enough to earn the stock a BUY recommendation. Review this free stock analysis before you do anything else to remove human error, guesswork, and emotion from your decision-making, and start investing smarter with VectorVest!

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VectorVest advocates buying safe, undervalued stocks, rising in price. LZB delivered solid Q4 performance and upbeat guidance for Q1 ahead, despite industry-wide challenges. The stock itself has poor upside potential, but fair safety and very good timing are enough to earn the stock a buy.

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