La-Z-Boy Comfortably Navigates Supply Chain Hurdles
Some insider sales by La-Z-Boy (NYSE: LZB) director Kurt. L. Darrow raised some red flags earlier this month but it’s proven to be no concern for investors. Mr. Darrow sold about 0.25% of the shares outstanding in 3 transactions netting roughly $2.6 million. The transactions left Mr. Darrow holding about 305,000 shares worth about 0.6% of the company and insiders about 4.0%. Now, with shares moving higher after a better-than-expected FQ2 report, it looks like Mr. Darrow sold too much, too soon.
On the flip side, information from Insidertrades.com reveals director James P. Hackett purchased shares earlier this year. The purchases were small but establish Mr. Hackett with an ownership stake and then there is the institutional activity to consider as well. Institutions and large shareholders hold roughly 92.0% of the shares and their holdings are growing. Over the last 12 months, institutions have been net buyers with some noteworthy purchases just this month. Not only has there been a flurry of buying since the release of earnings but Millenium Management LLC upped its stake by 23% in early November bringing the total holdings to 1.89% of the company.
La-Z-Boy Comfortably Beats The Consensus Estimate
Shares of La-Z-Boy shot up more than 5% in the wake of the Q3 results due to strong results, widening margins, and rising inventory, all of which point to sustained growth in the current and following quarters. The company reported $575.88 million in revenue which is good for a gain of 25.4% over last year and beat the consensus by 660 basis points. Revenue is up about 27% versus 2019 as well with strong written orders and backlogs to ensure 2-year growth continues too.
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On a segment basis, corporate-based Joybird sales led with growth of 37% but it is the smallest segment by far. The larger Wholesale and Retail segments both saw robust growth as well, however, with wholesales up 28% and retail sales up 19%. Written orders, a sign of future deliveries, fell in both segments but due to strong comps in the prior year. On a two-year stack, written orders are up double-digits with 2-year compound annual growth running at 14% wholesale and 12% retail.
Moving down the report, the company experienced about 300 basis points of YOY margin contraction due to rising costs and shipping issues but that is where the bad news ends. Margin is up sequentially at both the GAAP and operating level due to pricing actions, cost-saving efforts, and leverage and the company provided an optimistic outlook if no specific guidance.
Bob Lucian, Chief Financial Officer of La-Z-Boy Incorporated, said, "... taking all of these factors into consideration, we continue to expect sales and margin momentum to accelerate, particularly in the fourth quarter, and we continue to expect to deliver full-year consolidated operating margin at or near double digits."
The Technical Outlook: La-Z-Boy Sprints Higher
Shares of La-Z-Boy sprinted more than 5.0% higher in post-market action following the FQ2 earnings report and are set to move higher. The advance confirms support at the recently established bottom and a reversal in price action that we see taking the stock up another $10 or more. The indicators are bullish and support such a move if not a move higher. The analyst consensus is near the same level but take that with a grain of salt, there’s been no significant analyst activity since late in 2020 despite the vote of confidence we see in the Institutional buying data.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| La-Z-Boy (LZB) | $43.40 | +1.4% | 1.84% | 15.02 | Hold | $43.00 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.
