Today's Perilous Reversal Stock: Lumber Liquidators Holdings (LL)
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.
Trade-Ideas LLC identified
(
) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Lumber Liquidators Holdings as such a stock due to the following factors:
- LL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $515.8 million.
- LL has traded 297,354 shares today.
- LL is down 6.2% today.
- LL was up 10.2% yesterday.
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More details on LL:
Lumber Liquidators Holdings, Inc., together with its subsidiaries, operates as a multi-channel specialty retailer of hardwood flooring, and hardwood flooring enhancements and accessories. LL has a PE ratio of 17.6. Currently there are 2 analysts that rate Lumber Liquidators Holdings a buy, no analysts rate it a sell, and 9 rate it a hold.
The average volume for Lumber Liquidators Holdings has been 2.8 million shares per day over the past 30 days. Lumber Liquidators has a market cap of $800.7 million and is part of the services sector and retail industry. The stock has a beta of 1.57 and a short float of 44.4% with 0.48 days to cover. Shares are down 50.6% year-to-date as of the close of trading on Wednesday.
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Analysis:
rates Lumber Liquidators Holdings as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.
Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 14.2%. Since the same quarter one year prior, revenues slightly increased by 5.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- LL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.14 is very weak and demonstrates a lack of ability to pay short-term obligations.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Specialty Retail industry. The net income has decreased by 16.6% when compared to the same quarter one year ago, dropping from $20.80 million to $17.35 million.
- Looking at the price performance of LL's shares over the past 12 months, there is not much good news to report: the stock is down 73.39%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, LL is still more expensive than most of the other companies in its industry.
- You can view the full Lumber Liquidators Holdings Ratings Report.
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