How Will Lumber Liquidators (LL) Stock Be Affected by Earnings Results?

Lumber Liquidators (LL) is scheduled to release its 2015 third quarter earnings results before the market open on Wednesday morning.
By Amanda Schiavo ,

NEW YORK (TheStreet) -- Lumber Liquidators (LL) - Get Report is scheduled to release its 2015 third quarter earnings results before the market open on Wednesday morning.

Analysts are expecting that the hardwood flooring retailer will report a quarterly loss for the most recent quarter on revenue that has declined year over year.

Lumber Liquidators has been forecast to report a loss of 18 cents per share on revenue of $259.77 million for the three month period ending in September, according to analysts surveyed by Thomson Reuters.

The company's earnings came in at 58 cents per diluted share on revenue of $266.1 million for the 2014 third quarter.

The company has been struggling to get out from under a scandal that started at the beginning of the year in which it was alleged that Lumber Liquidators' China made flooring materials that contained dangerous levels of the chemical formaldehyde.

The issue led to a change in leadership at the company and the removal of the product from shelves, although Lumber Liquidators stood behind the safety of its products.

Shares of Lumber Liquidators closed higher by 1.61% to $14.23 on Tuesday afternoon. 

Separately, TheStreet Ratings team rates LUMBER LIQUIDATORS HLDGS INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

We rate LUMBER LIQUIDATORS HLDGS INC (LL) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 71.83%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 225.00% compared to 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.
  • LUMBER LIQUIDATORS HLDGS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, LUMBER LIQUIDATORS HLDGS INC reported lower earnings of $2.31 versus $2.77 in the prior year. For the next year, the market is expecting a contraction of 152.6% in earnings (-$1.22 versus $2.31).
  • 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 significantly decreased by 222.5% when compared to the same quarter one year ago, falling from $16.61 million to -$20.35 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Specialty Retail industry and the overall market, LUMBER LIQUIDATORS HLDGS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for LUMBER LIQUIDATORS HLDGS INC is currently lower than what is desirable, coming in at 25.12%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -8.20% is significantly below that of the industry average.
  • You can view the full analysis from the report here: LL
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