3 Reasons Leon’s (TSX:LNF) Stock Is a Screaming Buy Today

Leon’s Furniture Ltd. (TSX:LNF) is a stock that offers nice income, fantastic value, and the promise of growth in a friendly market.

| More on:
Target. Stand out from the crowd

Image source: Getty Images

Leon’s Furniture (TSX:LNF) is a Toronto-based company that operates as a retailer of home furnishings, mattresses, appliances, and electronics in Canada. Today, I want to discuss why Canadian investors should be eager to snatch up this exciting growth stock in what has been a strong start to 2023. Let’s jump in.

Why readers should be optimistic looking forward

In its most recent quarterly report, Leon’s president and chief executive officer (CEO) Matt Walsh lauded the company’s performance, “despite a challenging macro and consumer environment.”

“While the next several months are likely to be challenging across the retail landscape,” he continued. “LFL is better positioned than ever to deliver results for our customers and shareholders.”

Readers should not underestimate the potential of the mattress market. Sleep is important. Believe me; I never get enough of it. The first step in correcting that bad habit is finding a place to sleep that is right for you.

Last year, market researcher Fortune Business Insights estimated that the global mattress market was worth US$49.2 billion in 2021. Fortune Business Insights projects that the global mattress market will grow from US$50.6 billion in 2022 to US$72.9 billion by 2029. That would represent an attractive compound annual growth rate (CAGR) of 5.36% over the forecast period.

Leon’s has put together solid earnings in a tough climate

Investors can expect to see the company’s final batch of fiscal 2022 earnings sometime in February. It released its third-quarter fiscal 2022 results back on November 9. Fortunately, we can still draw on its recent strong performance.

Leon’s delivered total system sales of $801 million in the third quarter of fiscal 2022 compared to $825 million in the previous year. However, system sales were up 12% compared to the pre-pandemic quarter ending September 30, 2019. Meanwhile, revenue fell 3.1% to $662 million compared to the record quarterly revenue of $683 million in the third quarter of fiscal 2021. Leon’s has continued to show improvement across all product categories compared to its pre-pandemic results. This bodes well for the future this decade.

The company reported adjusted diluted earnings per share of $0.87 — up 13% from $0.77 it posted in the third quarter of fiscal 2021. Moreover, adjusted net income slipped 2.3% to $59.2 million. Gross profit moved up marginally to $304 million.

The stock offers up nice income right now

In the third quarter (Q3) of 2022, Leon’s Furniture declared a quarterly dividend of $0.16 per share. That represents a solid 3.7% yield. Investors should be happy with this income offering considering the growth potential that Leon’s stock provides. The dividend is a bonus that should entice Canadian investors, as we approach the midway point in January.

Don’t pass up on Leon’s terrific value in the middle of January!

Leon’s stock has plunged 30% year over year as of close on January 12. The stock has moved up marginally to start the new year.

Shares of Leon’s currently possesses a price-to-earnings ratio of 6.3. That puts this TSX stock in very attractive value territory at the time of this writing. Canadian markets have broadly picked up to start the new year. That means it may be the perfect time to snatch up this undervalued stock with solid income and a promising future. I’m looking to snatch up shares of Leon’s this January.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Investing

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.

Got $2,500? 2 Top Stocks That You Can Buy and Hold for a Lifetime

Shopify (TSX:SHOP) and Fortis (TSX:FTS) are great long-term plays to hang onto for the long haul.

Read more »

Oil pumps against sunset
Energy Stocks

Pulse Seismic: An Energy Stock Like No Other

The outlook for energy stocks remains strong, as demand continues to outpace supply. Do you know all your options for…

Read more »

Illustration of bull and bear
Dividend Stocks

Protect Your Wealth: 2 Defensive Gems to Buy in 2023

Looking to pick up some defensive gems for your portfolio? Protect your wealth by buying one of these stellar stocks…

Read more »

data analytics, chart and graph icons with female hands typing on laptop in background
Dividend Stocks

1 Oversold Dividend Stock (Yielding 6.5%) to Buy in the New Year

Here's why SmartCentres REIT (TSX:SRU.UN) is one top dividend stock long-term investors should consider in this current environment.

Read more »

Simple life style relaxation with Asian working business woman healthy lifestyle take it easy resting in comfort hotel or home living room having free time with peace of mind and self health balance
Energy Stocks

TFSA Investors: 2 Top Dividend Stocks for Passive Income

TFSA users can unlock the power of tax-free passive income by investing in top dividend stocks within the expanded $6,500…

Read more »

potted green plant grows up in arrow shape
Tech Stocks

Growth Stocks Down More Than 60% That Could Rally in 2023

Shopify is down more than 60%. Could it rebound in 2023?

Read more »

Man data analyze
Dividend Stocks

2 Top Dividend Stocks to Buy and Hold for Life

Dividend stocks like Canadian National Railway and TD Bank are excellent long-term assets to buy and hold.

Read more »

Hands protect a sprout in fertile soil.

Advisor Commentary: After Turnips Comes Hope

Ten or 15 years from now, today’s pain will be forgotten.

Read more »