What Is La-Z-Boy Incorporated’s (NYSE:LZB) Share Price Doing?

La-Z-Boy Incorporated (NYSE:LZB), might not be a large cap stock, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$29.43 and falling to the lows of US$22.53. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether La-Z-Boy’s current trading price of US$22.53 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at La-Z-Boy’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for La-Z-Boy

Is La-Z-Boy still cheap?

The share price seems sensible at the moment according to my price multiple model, where I compare the company’s price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 7.49x is currently trading slightly above its industry peers’ ratio of 7.3x, which means if you buy La-Z-Boy today, you’d be paying a relatively sensible price for it. And if you believe La-Z-Boy should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. Furthermore, it seems like La-Z-Boy’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s priced similarly to industry peers. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will La-Z-Boy generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. La-Z-Boy’s earnings over the next few years are expected to increase by 24%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in LZB’s positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at LZB? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on LZB, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for LZB, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you’d like to know more about La-Z-Boy as a business, it’s important to be aware of any risks it’s facing. For instance, we’ve identified 3 warning signs for La-Z-Boy (1 shouldn’t be ignored) you should be familiar with.

If you are no longer interested in La-Z-Boy, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.