LaZBoy (LZB) is a Zacks Rank #5 (Strong Sell) after the company recently posted a miss and the stock has sold off as a result. This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.
Description
La-Z-Boy, Inc. engages in the production, manufacturing, and distribution of residential furniture. It operates through the following business segments: Wholesale, Retail, and Corporate and Other. The Wholesale segment manufactures and imports upholstered furniture, such as recliners and motion furniture, sofas, loveseats, chairs, sectionals, modulars, ottomans and sleeper sofas, and imports case goods furniture, such as occasional pieces, bedroom sets, dining room sets, and entertainment centers. The Retail segment sells upholstered furniture, in addition to some case goods and other accessories to the end consumer through its company-owned La-Z-Boy Furniture Galleries stores. The Corporate and Other segment includes the shared costs for corporate functions, including human resources, information technology, finance, and legal. The company was founded by Edwards M. Knabusch and Edwin J. Shoemaker in 1927 and is headquartered in Monroe, MI.
Earnings History
When I look at a stock, the first thing I do is look to see if the company is beating the number. This tells me right away where the market’s expectations have been for the company and how management has communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
In the case LaZBoy (LZB) I see the company has beat the Zacks Consensus Estimate in two of the last four quarters and missed on two as well. This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.
The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.
The most recent quarter saw the company report EPS of $0.47 when the consensus was calling for $0.53. That 6 cent miss translates into a negative earnings surprise of 11.3%.
Earnings Estimates
The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower. For LaZBoy (LZB) I see annual estimates for next year moving lower of late.
The current fiscal year consensus number has slid from $3.20 to $2.86 over the last 60 days.
The next fiscal year has moved from $3.44 to $2.75 over the last 60 days.
Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).
It should be noted that a lot of stocks in the Zacks universe are seeing negative earnings estimate revisions. That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
La-Z-Boy Incorporated (LZB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
