NEW YORK (TheStreet) -- Shares of Tile Shop Holdings Inc. (TTS - Get Report) are plunging -5.46% to $12.29 in pre-market trading on Thursday after Credit Suisse (CS) lowered its price target and cut its 2014-2016 earnings per share estimates following "much weaker than expected results" at Lumber Liquidators (LL).
Credit Suisse cut its price target on Tile Shop to $16 from $18, and lowered earnings per share estimates on fiscal year 2014 to 37 cents from 40 cents.
It cut 2015 estimates to 51 cents from 54 cents, and cut 2016 estimates to 69 cents from 71 cents, citing weaker housing-related trends as a factor.
Separately, TheStreet Ratings team rates TILE SHOP HOLDINGS INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate TILE SHOP HOLDINGS INC (TTS) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and premium valuation."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 1.4%. Since the same quarter one year prior, revenues rose by 13.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- TILE SHOP HOLDINGS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, TILE SHOP HOLDINGS INC continued to lose money by earning -$0.82 versus -$1.59 in the prior year. This year, the market expects an improvement in earnings ($0.42 versus -$0.82).
- The gross profit margin for TILE SHOP HOLDINGS INC is currently very high, coming in at 76.65%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 5.76% trails the industry average.
- The debt-to-equity ratio of 1.11 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.30, which clearly demonstrates the inability to cover short-term cash needs.
- TTS's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 49.78%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
- You can view the full analysis from the report here: TTS Ratings Report