The markets are having a tough time finding the right prices. When most investors were expecting dismal news from La-Z-Boy, the company and its go-getting management surprised with news of a profit.

This is a fantastic time to be refurnishing a house. You cannot turn on a TV without seeing an ad by some desperate local furniture outlet.

In my neck of the woods it is so bad, well, let’s just say whoever is printing going-out-of-business banners is doing one heck of a business.

When unemployment is threatening to hit double-digit percentages and nobody knows what their next tax bill will look like, few folks are thinking about buying a new sofa.

In fact, some of my neighbors still have not taken the plastic off their old living room set.

Not quite so lazy

With the industry in a nosedive, La-Z-Boy (NYSE:LZB) investors were bracing for dismal fourth-quarter results. After a loss $4.5 million this time last year, the Street had every reason to expect more red this time around.

But thanks to a strong team of managers and some savvy business decisions, La-Z-Boy was actually able to get out a black pen.

The company recorded a quarterly profit of $5.3 million from continuing operations. It is income of $0.10 per share this quarter, versus a loss of $0.09 per share last Q4.

Investors were right to expect a decline in revenues. Americans are certainly not buying nearly as many luxury items as they were this time last year. In all, sales dropped by 23% to $284.5 million at the company.

If you had the ambition to read through La-Z-Boy’s report, you will notice its CEO, Kurt Darrow, took the time to outline many of the company’s recent strategic initiatives.

Let’s just say La-Z-Boy was far from a couch potato over the last three months.

Textbook moves

The company consolidated operations by closing a factor, it increased its use of cheaper Mexican labor, it took advantage of cellular-manufacturing efficiencies and it opened new stores, while closing a few with lower production.

The action reads like something out of a lean-manufacturing textbook. It is enough to make any B-school graduate smile.

Even better, it is more than enough to get share price surging. Investors are currently sitting on intra-day gains of over 22%.

This story shows the market is having a terribly tough time determining fair values and earnings predictions. By common logic, La-Z-Boy should be in serious trouble. Sales are plummeting and are showing no signs of a turnaround.

But thanks to an ability to move quickly and efficiently, the company just may be able to get out of this current economic mess relatively unscathed.

As I have said over the past few weeks, it is time to get back to fundamentals. Investors need to be researching strategic moves, changes in business plans and the role of savvy executives.

The Street has prices all wrong. Do your homework, determine true fair values and invest accordingly. Make the right decisions and you could be sitting on strong gains as more companies show investors there is more to this game than merely following the crowd.

Source: La-Z-Boy Not Looking So Lazy