What Happened?
Shares of furniture company La-Z-Boy (NYSE: LZB) fell 13% in the afternoon session after the company reported disappointing second-quarter results and issued a weak forecast for the upcoming quarter. The furniture maker's adjusted earnings per share of $0.47 missed Wall Street's expectations by nearly 11%. While its revenue of $492.2 million was in line with estimates, it remained flat compared to the same period last year, signaling stagnant sales. Adding to investor concerns, La-Z-Boy's revenue guidance for the third quarter also came in below analysts' projections. Profitability took a hit as well, with the company's operating margin declining to 4.5% from 6.5% a year ago, indicating that rising costs were squeezing profits. This combination of missed earnings, a weak outlook, and shrinking profitability prompted a significant sell-off in the stock.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy La-Z-Boy? Access our full analysis report here, it’s free.
What Is The Market Telling Us
La-Z-Boy’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. Moves this big are rare for La-Z-Boy and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 8 days ago when the stock gained 3.1% on the news that the latest Consumer Price Index (CPI) report showed inflation holding steady, bolstering investor optimism for a potential interest rate cut by the Federal Reserve. The data, which revealed that inflation remained at 2.7% for the year ending in July, was seen as a positive sign by investors. This stability increases the likelihood that the Federal Reserve might lower interest rates at its upcoming September meeting. Lower interest rates can stimulate the economy by making borrowing cheaper for both consumers and businesses, which often translates into higher consumer spending. This is particularly beneficial for the Consumer Discretionary sector, which includes companies selling non-essential goods and services like apparel, travel, and electronics.
La-Z-Boy is down 20.9% since the beginning of the year, and at $34.17 per share, it is trading 28.9% below its 52-week high of $48.02 from January 2025. Investors who bought $1,000 worth of La-Z-Boy’s shares 5 years ago would now be looking at an investment worth $1,037.
Do you want to know what moves the business you care about? Add them to your StockStory watchlist and every time a stock significantly moves, we provide you with a timely explanation straight to your inbox. It’s free and will only take you a second.
