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Why Lumber Liquidators Stock Just Popped 16%

What happened

Shares of flooring products retailer Lumber Liquidators (NYSE: LL) are going through the roof in Tuesday trading, up 16.2% as of 1 p.m. EDT after the company's stock was upgraded by analysts at Loop Capital.

So what

Loop upgraded Lumber Liquidators shares to "buy" with an $18 price target (from "hold" and an $11 target) today, reports TheFly.com, arguing that tariffs on imported goods have permitted Lumber Liquidators to sell product at strong prices, boosting gross profit margins. Loop believes that when Lumber Liquidators reports its second-quarter earnings three weeks from now, on August 5, profits will exceed expectations.

Moreover, while COVID-19 has weighed on many retailers' results, Loop believes that the pandemic could have a "positive impact" on the stock -- presumably from homebound consumers spending time and money on home improvements.

Construction workers examine blueprints in front of a house under construction.

Image source: Getty Images.

Now what

This is not, however, a common belief. According to data collected by Yahoo! Finance, the consensus opinion on Lumber Liquidators is that Q2 will show a sizable loss -- $0.20 per share is the general expectation. The third quarter, which ends in September, is expected to see a return to profitability for Lumber Liquidators; but at a projected profit of just $0.01 per share, it seems analysts generally expect to see the pandemic continue to weigh on Lumber Liquidators' business for some time to come.

So is Loop right in its projections, or is everyone else? Time will tell. Specifically, on August 5, Lumber Liquidators will finally give us its own insight into how things are playing out.  

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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

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