Will This Downgrade Hurt Lumber Liquidators (LL) Today? (Update)

Update (9:40 a.m.): Updated with Thursday market open information.

NEW YORK (TheStreet) -- Wedbush downgraded Lumber Liquidators  (LL) to "neutral" from "outperform" and set a $105 target price. The firm noted the housing environment is softening.

The stock was down 1.28% to $107.64 at 9:38 a.m. on Thursday.

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

"We rate LUMBER LIQUIDATORS HLDGS INC (LL) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."

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

  • The revenue growth came in higher than the industry average of 5.5%. Since the same quarter one year prior, revenues rose by 22.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • LUMBER LIQUIDATORS HLDGS INC has improved earnings per share by 48.0% 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 two years. We feel that this trend should continue. During the past fiscal year, LUMBER LIQUIDATORS HLDGS INC increased its bottom line by earning $2.77 versus $1.68 in the prior year. This year, the market expects an improvement in earnings ($3.50 versus $2.77).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 50.6% when compared to the same quarter one year prior, rising from $13.81 million to $20.80 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Specialty Retail industry and the overall market, LUMBER LIQUIDATORS HLDGS INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • 40.84% is the gross profit margin for LUMBER LIQUIDATORS HLDGS INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 8.04% is above that of the industry average.
  • You can view the full analysis from the report here: LL Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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.

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