La-Z-Boy Inc (NYSE: LZB)

Sector: Consumer Cyclical Industry: Furnishings, Fixtures & Appliances CIK: 0000057131
Market Cap 1.56 Bn
P/B 1.50
P/E 18.68
P/S 0.73
ROIC (Qtr) 5.11
Div Yield % 2.37
Rev 1y % (Qtr) 3.80
Total Debt (Qtr) 568.47 Mn
Debt/Equity (Qtr) 0.55
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About

La-Z-Boy Inc., often recognized by its ticker symbol LZB, is a prominent player in the residential furniture industry within the United States and operates through two primary segments: Retail and Wholesale. The company's main business activities involve the production of reclining chairs and distribution of residential furniture. La-Z-Boy has a significant presence in the American market and also operates in Canada and other countries globally. La-Z-Boy generates revenue through its diverse product range, which includes reclining chairs, sofas,...

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Investment thesis

Bull case

  • Strong operating cash flow of 237.69M provides robust 0.42x coverage of total debt 568.47M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 306.12M provide 3.46x coverage of short-term debt 88.55M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 237.69M provides exceptional 299.36x coverage of minority interest expenses 794000, showing strong core operations.
  • Operating cash flow of 237.69M provides exceptional 454.48x coverage of interest expenses 523000, showing strong debt service capability.
  • Operating cash flow of 237.69M provides strong 15.12x coverage of stock compensation 15.72M, indicating sustainable incentive practices.

Bear case

  • Operating cash flow of 237.69M barely covers its investment activities of (164.94M), with a coverage ratio of -1.44, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 237.69M provides thin coverage of dividend payments of (37.17M) with a -6.40 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 306.12M provide limited coverage of acquisition spending of (91.18M), which is -3.36x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 127.45M show weak coverage of depreciation charges of 125.05M, with a 1.02 ratio indicating high capital intensity and potential reinvestment needs.
  • High depreciation of 125.05M relative to operating cash flow of 237.69M, which is 0.53x suggests significant maintenance capital requirements affecting free cash flow.

Peer comparison

Companies in the Furnishings, Fixtures & Appliances
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 SGI Somnigroup International Inc. 18.99 Bn 125.40 7.03 6.62 Bn
2 SN SharkNinja, Inc. 18.48 Bn 32.14 3.04 0.89 Bn
3 MHK Mohawk Industries Inc 8.23 Bn 19.54 0.77 2.34 Bn
4 PATK Patrick Industries Inc 5.10 Bn 175.24 10.70 1.53 Bn
5 WHR Whirlpool Corp /De/ 4.88 Bn 15.36 0.31 7.19 Bn
6 HNI Hni Corp 2.23 Bn 44.66 1.16 0.46 Bn
7 TILE Interface Inc 2.17 Bn 30.23 2.24 0.39 Bn
8 LEG Leggett & Platt Inc 1.59 Bn 5.64 0.39 1.66 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.83 0.98
EV to Cash from Ops. EV/CFO 7.27 -9.92
EV to Debt EV to Debt 3.04 25.70
EV to EBIT EV/EBIT 13.55 17.69
EV to EBITDA EV/EBITDA 7.12 15.96
EV to Free Cash Flow [EV/FCF] EV/FCF 10.92 17.28
EV to Market Cap EV to Market Cap 1.11 1.76
EV to Revenue EV/Rev 0.81 1.40
Price to Book Value [P/B] P/B 1.50 9.34
Price to Earnings [P/E] P/E 18.68 16.89
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.25 1.74
Dividend Payout Ratio % Div Payout % (Qtr) 44.40 9.37
Dividend per Basic Share Div per Share (Qtr) 0.90 0.51
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 23.42 28.74
Interest Coverage Int. cover (Qtr) 243.69 -23.23
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -18.53 -9.80
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -2.69 70.23
Dividend Growth (1y) % Div 1y % (Qtr) 10.00 0.00
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -32.45 -367.80
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -14.74 -34.93
EBIT Growth (1y) % EBIT 1y % (Qtr) -24.04 -198.55
EBT Growth (1y) % EBT 1y % (Qtr) -24.11 -72.49
EPS Growth (1y) % EPS 1y % (Qtr) -31.19 -131.79
FCF Growth (1y) % FCF 1y % (Qtr) 42.55 0.53
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 1.03 -2.36
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.02 1.16
Cash Payout Ratio Cash Payout (Qtr) 0.12 0.13
Cash Ratio Cash Ratio (Qtr) 0.63 0.30
Current Ratio Curr Ratio (Qtr) 1.66 1.96
Debt to Equity Ratio Debt/Equity (Qtr) 0.55 0.57
Interest Cover Ratio Int Coverage (Qtr) 243.69 -23.23
Times Interest Earned Times Interest Earned (Qtr) 243.69 -23.23
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 11.90 -2.26
EBIT Margin % EBIT Margin % (Qtr) 5.99 -4.46
EBT Margin % EBT Margin % (Qtr) 5.97 -7.49
Gross Margin % Gross Margin % (Qtr) 43.50 33.73
Net Profit Margin % Net Margin % (Qtr) 3.90 -8.04