Lumber Liquidators Earnings: The 3 Most Important Things to Know
Hardwood and laminate flooring retailer Lumber Liquidators Holdings Inc. (NYSE: LL) reported second-quarter earnings Tuesday morning that sent the stock soaring. The stock was up 33% around 2:30 p.m. While much of the market's reaction is based on the company's strong financial results, there are other things investors need to pay close attention to. Here are three important takeaways.
To start, Lumber Liquidators outperformed the financial expectations of Wall Street analysts by a significant margin. Total sales were $263.5 million, up 10.7% from last year, for the third-highest quarter of sales in the company's history. Additionally, the company generated a net profit of $4.5 million, good for $0.16 per share, while Wall Street analysts were expecting a loss of $0.07 per share on average. Needless to say, the result is far, far better than any of the financial crowd expected. It was also the company's first profitable quarter since 2015, when allegations first came out that it was selling Chinese-made laminate flooring that was potentially hazardous to people's health. Frankly, few analysts who cover the company were expecting it to return to profitability before 2018.
And with a huge 25% of shares outstanding sold short at last report, a lot of money was betting against the company doing well this quarter, so that's probably the biggest factor pushing the stock price up so much: short-sellers rushing to buy shares to cover their short positions.
Source: Fool.com
