La-Z-Boy Shares Soared: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of recliner specialist La-Z-Boy (NYS: LZB) jumped 20% today after its quarterly results impressed Wall Street.

So what: La-Z-Boy's solid second-quarter results -- profit more than doubled to $7.9 million on strong upholstery sales -- suggest that demand is indeed roaring back from a prolonged slump. The company's gross margin even widened from 29% to 31.1%, giving Mr. Market plenty of reason to be optimistic about its long-term profitability.

Now what: I'd be cautious about riding this recent wave of momentum. "We expect the operating environment for the industry to remain challenging based on low consumer confidence levels, a depressed housing market and volatility in the financial markets," Chairman and CEO Kurt Darrow said. While La-Z-Boy fully expects to navigate through those choppy waters successfully, the stock's recent surge -- nearly 70% over the past two months alone -- leaves little room for error.

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At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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