Is La-Z-Boy (LZB) A Bargain On Its Missouri Expansion?
La-Z-Boy’s Missouri expansion puts operations in focus
La-Z-Boy (LZB) is committing US$23 million to expand manufacturing and build a 150,000-square-foot distribution center in Neosho, Missouri, a move aimed at tightening its U.S. supply chain.
La-Z-Boy’s US$31.67 share price reflects a mixed picture, with the stock down 24.85% on a 30-day share price return and 15.09% year to date, even as the 3-year total shareholder return of 9.51% points to more moderate long run progress and fading recent momentum around moves like the Missouri expansion.
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Bulls see La-Z-Boy’s Missouri outlay as the kind of concrete investment that supports the current valuation, while bears point to recent share price weakness. Which story do the valuation numbers lean toward next?
Most Popular Narrative: 22.8% Undervalued
La-Z-Boy’s most followed valuation story pegs fair value at $41 per share, meaning the $31.67 last close implies a wide gap that investors are trying to explain.
Expansion of company-owned retail stores, including a significant new 15-store acquisition and plans to open 15 new stores this year, positions La-Z-Boy to capture increased demand from new homeownership and consumer investment in home comfort, supporting future revenue growth and market share gains.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable. Read the complete narrative.
Want to see what is sitting underneath that $41 fair value for La-Z-Boy? The narrative leans heavily on a step up in earnings power, modest revenue expansion, and a richer future profit multiple that has to hold together for years. Consider which assumptions do the heavy lifting in that model, and how sensitive the story is if any one of them changes.
Result: Fair Value of $41 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
Still, shrinking wholesale orders and underperforming Joybird and international operations could easily undercut the La-Z-Boy upside story that analysts are modeling.
Find out about the key risks to this La-Z-Boy narrative.
Next Steps
Mixed signals around La-Z-Boy’s Missouri build and valuation story can feel frustrating, so move quickly, review the data directly, and decide where the risk reward balance really sits. To see both sides laid out clearly, review the 2 key rewards and 3 important warning signs
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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