NEW YORK (TheStreet) -- Shares of Lumber Liquidators Holdings Inc. (LL) are down 2.21% to $53.10 in pre-market trading on Tuesday after the company was downgraded to "hold" from "buy" at Canaccord Genuity.
The firm lowered the price target to $51 from $71 for the American hardwood flooring retail company.
Cannaccord also cut EPS estimates to $2.43 from $2.45 for fiscal 2014, and to $2.63 from $3.07 for fiscal 2015.
The firm said it reduced the ratings for Lumber Liquidators Holdings because the company has consistently missed expectations and cut guidance.
"LL has faced numerous obstacles this year, including difficult weather, crippling, self-inflicted inventory constraints, and an overall slowdown in the flooring market," said Cannacord analysts Laura Champine and Jason Smith. "We have concerns regarding visibility as LL still has work to do to recover from the impact of the earlier inventory problems (higher clearance and discounting), while the flooring market has yet to show signs of a rebound."
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 a few notable 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 revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- LL's revenue growth has slightly outpaced the industry average of 1.5%. Since the same quarter one year prior, revenues slightly increased by 4.6%. 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 0.09 is very weak and demonstrates a lack of ability to pay short-term obligations.
- 39.15% is the gross profit margin for LUMBER LIQUIDATORS HLDGS INC which we consider to be strong. Regardless of LL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.91% trails the industry average.
- LUMBER LIQUIDATORS HLDGS INC's earnings per share declined by 20.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, LUMBER LIQUIDATORS HLDGS INC increased its bottom line by earning $2.77 versus $1.68 in the prior year. For the next year, the market is expecting a contraction of 11.9% in earnings ($2.44 versus $2.77).
- You can view the full analysis from the report here: LL Ratings Report