Lumber Liquidators Down to Strong Sell - Analyst Blog

On Jun 17, 2014, Zacks Investment Research downgraded Lumber Liquidators Holdings, Inc. ( LL ) to a Zacks Rank #5 (Strong Sell).

Why the Downgrade?

Lumber Liquidators has witnessed sharp downward estimate revisions over the last 60 days. The primary reason behind this was the company's lackluster first-quarter 2014 performance, wherein earnings per share of 49 cents missed the Zacks Consensus Estimate by 22.2% and fell 14.0% year over year.

Although net sales rose 6.9% year over year to $246.3 million but fell short of the Zacks Consensus Estimate of $263 million as adverse weather conditions took a toll on the performance of 135 out of 331 outlets. Those impacted by weather reported a decline of 3.8% in sales whereas the remaining stores reported a 14.6% rise in net sales.

Comparable-store net sales decreased 0.6%, comprising a decline of 13.1% in weather-impacted outlets and an increase of 8.5% in the remaining outlets.

Despite soft results, management is confident of turning things around given the implementation of its development strategies and improvement in weather conditions. As a result, the company reiterated its earnings and sales guidance for 2014. The company continues to expect net sales in the range of $1.15-$1.20 billion and earnings in the band of $3.25-$3.60 per share for 2014.

However, these projections were not enough to alleviate the concerns of the analysts who remain skeptical about the stock as reflected from a fall in estimates. The Zacks Consensus Estimate for 2014 and 2015 fell 4% and 4.8% to $3.36 and $4.18 per share respectively, over the last 60 days.

Other Stocks to Consider

Not all retail stocks are performing as disappointingly as Lumber Liquidators. Better-ranked stocks worth mentioning in the retail sector include Herbalife Ltd. ( HLF ), Build-A-Bear Workshop Inc. ( BBW ) and Citi Trends, Inc. ( CTRN ). All these stocks carry a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

CITI TRENDS INC (CTRN): Free Stock Analysis Report

HERBALIFE LTD (HLF): Free Stock Analysis Report

BUILD-A-BEAR WK (BBW): Free Stock Analysis Report

LUMBER LIQUIDAT (LL): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.