Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model NEW YORK ( TheStreet) -- La-Z-Boy (NYSE: LZB) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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- The revenue growth greatly exceeded the industry average of 28.7%. Since the same quarter one year prior, revenues slightly increased by 7.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- LZB's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, LZB has a quick ratio of 2.14, which demonstrates the ability of the company to cover short-term liquidity needs.
- Compared to its closing price of one year ago, LZB's share price has jumped by 91.04%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, LZB should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- LA-Z-BOY INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, LA-Z-BOY INC increased its bottom line by earning $1.65 versus $0.45 in the prior year. For the next year, the market is expecting a contraction of 49.1% in earnings ($0.84 versus $1.65).
-- Written by a member of TheStreet Ratings Staff