NEW YORK (TheStreet) -- Shares of Liquidity Services Inc. (LQDT) are falling -10.83% to $13.09 after cutting its third quarter earnings guidance to 10%-20% below its previous forecast of 28 cents to 34 cents per diluted share. The consensus estimate was for an EPS of 30 cents.
The auction marketplace for surplus and salvage assets is expecting adjusted EBITDA to be 10% to 20% lower than its original $18 million to $21 million estimates.
Additionally, the company announced its sale of selected rolling stock and other assets under its surplus contract with the U.S. Defense Logistics Agency were halted at the request of the DLA.
The agency wants to further review of the impact of regulatory rules on the DLA rolling stock property stream before moving on with its purchase.
Liquidity Services said it's expecting its guidance cut and sales halt to "adversely impact" its third quarter and full year financial results.
Separately, 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 and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- LQDT 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. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.05, which illustrates the ability to avoid short-term cash problems.
- LQDT, with its decline in revenue, underperformed when compared the industry average of 21.2%. Since the same quarter one year prior, revenues slightly dropped by 1.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for LIQUIDITY SERVICES INC is currently lower than what is desirable, coming in at 28.59%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.38% significantly trails the industry average.
- Net operating cash flow has significantly decreased to $4.12 million or 61.26% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: LQDT Ratings Report