La-Z-Boy(LZB) - Get Report reported for third quarter off 2015, beating analyst's estimates and reaching several key targets.

Share price rose nearly 19% and has since sustained its current levels after the company reported earnings of 43 cents per share that beat analysts' estimate by three cents. Revenues came in at $384.01 million.

With 331 stores opened, La-Z-Boy's management also reported that the company has reached 80% of its ambitious "4-4-5" store initiative plan in just over two years. Launched in 2014, the company initiative aimed at growing the number of company-owned stores to 400, while averaging $4 million in revenue per store over a five-year time period.  

The third quarter was a good one for the company. The retail segment of the business continues to perform exceptionally well, with sales increasing 22.7% year-over-year to $110 million. Since the 4-4-5 initiative was announced in 2013, the company's retail business has increased 66%. Some key milestones in the third quarter:

  • Consolidated operating margins of 9.1%, the highest in any quarter in 12 years.
  • Retail margins at 8%, the highest in company history.
  • Consolidated earnings increased 7.3% year-over-year.

The initiative also aimed at increasing La-Z-Boy's upholstery business, which is the largest segment of the company. In the third quarter, the upholstery segment increased 5.6% year-over-year. Margins were particularly impressive at 10.9%, retail margins increased over 70% on a year-over-year basis to 8%, and case goods margins increased 118% year-over-year to 7.2%.

LZB data by YCharts

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Zack's Equity Research, which had downgraded the company to a sell just before earnings, upgraded the stock. Currently, four analysts covering the stock rate La-Z-Boy a strong buy. Institutional ownership continues to buy into the company. BlackRock (16.15%) and Vanguard (7.3%) both added shares recently. 

La-Z-Boy is moving in the right direction and reached several milestones in the most recent quarter. The company's next target is to become a $1.6 billion enterprise in North America. With strong management, there is every reason to believe the company can continue to act on the guidance it gives.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.