The Rise of La-Z-Boy: Stock Jumps on Strong Earnings and Upbeat Outlook

Key Takeaways

• La-Z-Boy shares surged over 9% in premarket trading following the release of better-than-expected quarterly results and positive forward guidance.
• CEO Melinda Whittington highlighted the company’s record-high conversion rates and increasing average ticket and design sales, despite challenges in the furniture industry.
• Investors should keep an eye on the $41 level as a potential area of resistance for La-Z-Boy shares.

Furniture giant La-Z-Boy (LZB) experienced a significant boost in its stock price, with shares soaring more than 9% before the market opened on Tuesday. The surge came after the company reported impressive quarterly earnings and provided a promising outlook for future sales, alleviating concerns about weakening consumer spending and a sluggish housing market.

For the quarter ending April 27, La-Z-Boy delivered adjusted earnings of 95 cents per share, surpassing analysts’ expectations of 70 cents per share. Although revenue dipped by 1% to $554 million, it still exceeded the projected $516.4 million. Looking ahead, the company anticipates net sales for the current quarter to range between $475 million and $495 million, with the midpoint of $485 million surpassing estimates.

CEO Melinda Whittington expressed confidence in La-Z-Boy’s performance, noting that the company’s conversion rates were at an all-time high and average ticket and design sales were on an upward trajectory for the year. Despite industry challenges stemming from high interest rates and a sluggish housing turnover rate, Whittington remains optimistic about La-Z-Boy’s ability to outperform competitors and gain market share.

La-Z-Boy’s growth strategy for fiscal 2025 revolves around its Century Vision plan, which includes the opening of 12 to 15 new La-Z-Boy Furniture Galleries stores, primarily in the latter half of the year.

Monitoring Earnings-Driven Buying

La-Z-Boy shares have been trading within a broad rising wedge pattern since early last year, with the 200-day moving average offering additional support near the lower trendline of the pattern. Prior to the earnings announcement, the stock exhibited a piercing pattern near the wedge’s lower trendline on above-average volume, signaling a potential reversal to the upside. As a result, shares are poised to open significantly higher on Tuesday.

Investors should pay close attention to the $41 level on the chart, where selling pressure may emerge near the rising wedge’s upper trendline. A breakout above this key level, supported by strong volume, could lead to an acceleration of the longer-term uptrend for La-Z-Boy shares.

As of two hours before Tuesday’s opening bell, La-Z-Boy shares were up 9.1% at $37.20.

Disclaimer: The information provided in this article is for informational purposes only. The author does not hold any positions in the securities mentioned at the time of writing.

Original Source: Investopedia