When Should You Buy La-Z-Boy Incorporated (NYSE:LZB)?

La-Z-Boy Incorporated (NYSE:LZB), might not be a large cap stock, but it saw a decent share price growth in the teens level on the NYSE over the last few months. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on La-Z-Boy’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for La-Z-Boy

What's The Opportunity In La-Z-Boy?

Good news, investors! La-Z-Boy is still a bargain right now. According to my valuation, the intrinsic value for the stock is $45.40, but it is currently trading at US$29.24 on the share market, meaning that there is still an opportunity to buy now. However, given that La-Z-Boy’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

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. However, with a negative profit growth of -4.4% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for La-Z-Boy. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although LZB is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to LZB, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on LZB for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

So while earnings quality is important, it's equally important to consider the risks facing La-Z-Boy at this point in time. For example - La-Z-Boy has 1 warning sign we think you should be aware of.

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.