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La-Z-Boy (LZB) recently delivered its third consecutive positive earnings surprise on the back of a stellar 12.7% jump in same-store written sales for its Furniture Galleries store network. This prompted analysts to revise their earnings estimates meaningfully higher for both this year and next, sending the stock to a Zacks Rank No. 1 (Strong Buy).

Based on current consensus estimates, analysts project 49% earnings growth this year and 21% next year. Given the strong earnings momentum and growth projections, its forward P/E multiple of 19 looks reasonable. This leaves plenty of upside for the stock to continue running higher over the next several weeks.

La-Z-Boy Incorporated is a residential furniture maker that markets its products under various brand names including La-Z-Boy, England, Lea, Kincaid, and American Drew. The company also operates a retail division of more than 330 franchise and company-owned stores.

First-Quarter Results

La-Z-Boy reported better-than-expected results for the first quarter of its fiscal 2014 on Aug. 20. The first quarter is typically a seasonally slow quarter for the company, but its results this time were anything but sluggish. Earnings per share came in at $0.18, beating the Zacks Consensus Estimate by 3 cents. And it was more than double EPS of 8 cents in the same quarter last year.

Sales rose 6% to $318.9 million. Same-store written sales for the La-Z-Boy Furniture Galleries store network jumped an impressive 12.7%, and that was on top of a 9.2% increase in last year's first quarter. Meanwhile, profit margins expanded and operating income surged 94% as the company leveraged its fixed expenses.

Estimates Rising

Following the Q1 beat, analysts revised their estimates higher for La-Z-Boy, sending the stock to Zacks Rank No. 1 (Strong Buy). The Zacks Consensus Estimate for 2013 is now $1.18, up from $1.14 just 30 days ago. The 2014 consensus is currently $1.42, up from $1.34 over the same period. Based on consensus estimates, analysts project 49% earnings growth this year and 21% growth next year.

You can see the strong increase in consensus estimates over the last few months in the company's "Price and Consensus" chart:

Strong earnings momentum can be seen throughout the furniture industry, too. It ranks 13th out of the 265 industries that Zacks Ranks.

Valuation

La-Z-Boy doesn't look like a screaming value at 19x 12-month forward earnings, but it's not an unreasonable multiple considering the very strong earnings growth projections. Plus, it's price-to-sales ratio of 0.9 is a slight discount to the industry median of 1.0. The company also pays a dividend that yields 0.7%.

The Bottom Line

With rising estimates, strong growth projections and reasonable valuation, La-Z-Boy offers investors attractive upside potential.

La-Z-Boy: Free Stock Analysis Report (email registration required)

Source: Bull Of The Day: La-Z-Boy