NEW YORK (TheStreet) -- Liquidity Services (LQDT) is selling off after it was determined the apparent high bidder for a contract with the U.S. Defense Logistics Agency (DLA) for a higher winning bid than expected.
By late morning, shares had plunged 10.7% to $19.97. Trading volume of 3.4 million was more than seven times its three-month daily average.
The marketplace for surplus and salvage assets said as part of the contract it would purchase, manage and sell non-rolling stock surplus assets of the U.S. Department of Defense (DoD).
The Washington, D.C.-based business said its high bid was equal to 4.35% of DoD's original acquisition value (OAV), far higher than the current rate of 1.8% paid on the OAV. The surplus contract has a base term of two years with four one-year renewal options.
Bidding for the DoD's separate surplus rolling stock contract will be held in a live auction by the DLA on Wednesday. Following the conclusion of the auction event and a DLA determined apparent high bidder, Liquidity Services will provide an update.
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TheStreet Ratings team rates LIQUIDITY SERVICES INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate LIQUIDITY SERVICES INC (LQDT) 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 largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and a generally disappointing performance in the stock itself."