"While we still believe that challenges remain for the Chili's brand given its positioning in the hyper competitive Bar & Grill category, the Company's betterthan- expected sales/traffic in 3Q lends greater credibility to the turnaround story, in our view," Sterne Agee analysts wrote in an April 24 report. "Accordingly, we view the downside risk as fairly limited in the near-term and are thus upgrading from Underperform to Neutral."Shares of Brinker International hit a 52-week high Tuesday of $32.68. The stock's 52-week low of $19.50 was set on Sept. 12. Brinker's forward P/E is 14.36; the average for restaurants and bars is 20.13. For comparison, Cracker Barrel (CBRL) has a forward P/E of 12.54. Nine of the 17 analysts who cover Brinker rated it hold. Six analysts gave the stock a buy rating and two rated it sell. The stock has risen 20.7% year to date.
La-Z-Boy "We were encouraged by our meeting with LZB management and believe the outlook for next year remains bright, despite increases in raw material costs," KeyBanc Capital Markets analysts wrote in an April 24 report. "While these costs have likely increased in recent months, we believe LZB has adequately planned for the headwind. Over the last year, LZB raised prices to keep up with raw material increases. Looking ahead, LZB built in further price increases in its products to keep up with a similar level of raw material headwind, which should leave adequate room for input price inflation. LZB renewed its advertising agreement with Brooke Shields, which we view positively. Furthermore, management remains confident that it can generate a 20-30% contribution margin for next year. Recall, our 2013 EPS estimate of $0.92 is predicated on a 6% revenue growth and a 30% contribution margin, and we believe our revenue estimate could prove conservative if LZB continues to execute successfully or if the housing recovery continues." Shares of La-Z-Boy hit a 52-week high Tuesday of $15.77. The stock's 52-week low of $6.76 was set on Oct. 4. La-Z-Boy's forward P/E is 16.69 times; the average for furnishings companies is 16.83. For comparison, Ethan Allen (ETH) has a higher forward P/E of 17.85. Four of the six analysts who cover La-Z-Boy rated it buy. One analyst gave the stock a hold rating and another rated it sell. The stock has risen 30.25% year to date. -- Written by Alexandra Zendrian
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