LZB: Margin Outlook And Dividend Increases Will Shape Future Returns

Analysts have raised their La Z Boy price target to $39 from $36, citing improved margin expectations and a slightly higher future earnings multiple, despite moderating revenue growth assumptions.

Analyst Commentary

While the latest upgrade and higher price target underscore improving confidence in La Z Boy s earnings power, not all market participants are fully convinced that the current trajectory can be sustained. Bearish analysts continue to highlight execution and demand risks that could pressure the stock if fundamentals fall short of recent expectations.

These more cautious views generally focus on the durability of margin gains, the health of consumer spending in discretionary home furnishings, and the extent to which the recent valuation uplift already reflects much of the anticipated improvement.

Bearish Takeaways

• Bearish analysts caution that the recent price target increase leaves less room for error, and some argue that the current valuation already reflects optimistic assumptions for stable or expanding margins.
• Some remain concerned that moderating revenue growth could prove more pronounced than anticipated, particularly if consumer demand for big ticket furniture weakens further, which could put pressure on top line visibility.
• Cautious views also highlight execution risk around cost controls and supply chain efficiency, warning that any setbacks could quickly erode the margin gains now reflected in earnings forecasts.
• A subset of bearish analysts believe that multiple expansion may be difficult to sustain if industry growth normalizes, and they suggest the shares could face downside if La Z Boy underdelivers on growth or profitability targets.

What's in the News

• Issued new third quarter fiscal 2026 guidance, projecting sales of $525 million to $545 million, implying 1% to 4% year over year growth (company guidance)
• Board of Directors declared a quarterly cash dividend of $0.242 per share, a 10% increase from the prior level and marking the fifth consecutive year of double digit dividend hikes, payable December 15, 2025 to shareholders of record on December 4, 2025 (company announcement)

Valuation Changes

• Fair Value Estimate has risen slightly, moving from $36 to $39, reflecting modestly higher expectations for La Z Boy s intrinsic value.
• Discount Rate has edged higher from 9.03% to 9.23%, implying a marginally higher required return and slightly more conservative risk assumptions.
• Revenue Growth has been revised down, with long term annual growth expectations reduced from approximately 3.0% to about 2.1%.
• Net Profit Margin has increased, with the forecast improving from roughly 5.5% to about 6.3%, indicating stronger anticipated profitability.
• Future P/E has risen slightly from 14.38x to 14.66x, suggesting a modestly higher valuation multiple on expected earnings.