How’s That Housing Recovery Going? These Earnings Reports Could Provide Answers: WSM, LZB & AMWD

On Tuesday, furniture retail stocks Williams-Sonoma (NYSE: WSM) and La-Z-Boy Incorporated (NYSE: LZB) along with kitchen and bath cabinet maker American Woodmark Corporation (NASDAQ: AMWD) are scheduled to report earnings. Specifically, Williams-Sonoma (WSM) and La-Z-Boy Incorporated (LZB) will report earnings after the market closes, meaning there is still time to place a trade ahead of earnings while American Woodmark Corporation (AMWD), which has made big price swings over the last two trading days, will report earnings before the market opens. I should mention that its worth watching these stocks for any signs of a recovery in housing but I should also point out that even with a recovery underway in some markets, American consumers may not be inclined to go out and buy new furniture or cabinets. So what should traders and investors alike expect with the earnings reports from Williams-Sonoma (WSM), La-Z-Boy Incorporated (LZB) and American Woodmark Corporation (AMWD)? Here is a quick earnings report preview and overview of all three stocks:

Williams-Sonoma (NYSE: WSM) Is Looking Comfortable

Williams-Sonoma is a specialty retailer of home furnishings in the United States and Canada that operated 576 stores in 44 states, Washington DC, Canada and Puerto Rico. In addition to its flagship Williams-Sonoma store chain, Williams-Sonoma also operates the West Elm and Pottery Barn brands. On Monday, Williams-Sonoma fell 0.69% to $37.33 (WSM has a 52 week trading range of $27.90 to $40.76 a share) for a market cap of $3.7 billion plus the stock is down 3% since the start of the year, up 29.3% over the past year and up 19.4% over the past five years. Wall Street expects Williams-Sonoma to report a 6% revenue rise to $864 million and an EPS rise of 8.1% to 40 cents per share but the company has beaten earnings for the past four quarters. Last quarter, Williams-Sonoma reported a net revenue rise of 6.1% to $818 million thanks to a 5.4% increase in overall same-store sales along with a 22.1% same-store sale increase for its West Elm brand, a 9.1% increase in the Pottery Barn brand and a 3.2% decline in the Williams-Sonoma brand. Williams-Sonoma has also been giving encouraging earnings guidance plus the stock has been raising dividends to the point where it now has a forward dividend of $0.88 for a dividend yield of 2.4%. Hence, you are probably safe redecorating your portfolio with a few shares of Williams-Sonoma.

La-Z-Boy Incorporated (NYSE: LZB): Will There Be Another Recline?

La-Z-Boy first introduced the recliner in 1928 and today its one of the world’s leading residential furniture producers, marketing furniture for every room of the home. On Monday, La-Z-Boy fell 2.16% to $13.60 (LZB has a 52 week trading range of $6.76 to $16.43 a share) for a market cap of $709 million plus the stock is up 14.3% since the start of the year, up 89.1% over the past year and up 42.4% over the past five years. Investors should note that the last time La-Z-Boy reported earnings, shares experienced a double digit recline and helped to push down other furniture stocks. At first glance, La-Z-Boy’s results looked good in that same-store sales surged 10% and EPS rose from $0.19 a share to $0.37 but putting things under the microscope reveals that the bottom like got a $0.19 boost from anti-dumping duties – meaning LZB missed Wall Street’s expectations. Moreover, revenue slipped 3.4% to $327 million but the company blamed a shorter operating period and changing tax rates. Nevertheless, La-Z-Boy’s management said it was well positioned to capitalize on any strengthening in the economy, consumer confidence and the housing market BUT the company also failed to acknowledge that those trends were underway. Given much of the recent economic data we have been seeing, investors may not be reclining comfortably after La-Z-Boy reports earnings.

American Woodmark Corporation (NASDAQ: AMWD) Had Reported a Surge in Its New Construction Business Last Quarter

American Woodmark Corporation is a manufacturer and distributor of kitchen and bath cabinets for the remodeling and new home construction markets. On Friday, American Woodmark Corporation surged 16.23% to $20.70 but then on Monday it sank 11.88% to $18.24 (AMWD has a 52 week trading range of $10.88 to $20.97 a share) for a market cap of $262.57 million plus the stocks is down 33.53% since the start of the year, up 33.3% over the past year and down 35.3% over the past five years. I am not seeing any public news to explain the sudden rise and fall. Otherwise and the last time American Woodmark Corporation reported earnings, revenues rose 10% from $124.2 million to $136.2 million thanks to a 30% sales increase in its new construction business (which offset declines in its remodeling business through home improvement retailers) but the company’s net loss rose from $3.4 million (24 cents per share) to $6 million (42 cents per share) thanks to restructuring charges and other items. Without those items, American Woodmark Corporation would have lost 11 cents per share verses 18 cents. Nevertheless, American Woodmark Corporation is probably now on a better footing at least financially as its closed two manufacturing plans last spring and trimmed its retirement program.

The Bottom Line. At the end of the day and regardless of the earnings reports that Williams-Sonoma (WSM), La-Z-Boy Incorporated (LZB) and American Woodmark Corporation (AMWD) will report, investors and traders alike really need to be asking whether they or their friends have purchased any new furniture or cabinets lately as the answer to that question will decide whether or not these stocks are worth buying right now.