February 1, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of online auctioneer Liquidity Services (Nasdaq: LQDT ) were getting bid down by investors in early trading today before staging an impressive rally. Shares fell as much as 10% in intraday trading, but were up more than 4% at the time of this writing.
So what: It's earnings season and the action in Liquidity Services' shares is due to the company's fiscal-first-quarter earnings report. The numbers for the quarter looked quite good, with revenue rising 35% from last year, while adjusted earnings per share soared by 118%. Better still, both the top and bottom line bested the expectations of Wall Street analysts.
Now what: So why the drop in early trading? That probably had a lot to do with the company's outlook -- which management described as "cautious." The company gave a nod to "volatility in the macro environment" and said it expects that buyers would continue to create pricing pressure in certain areas of the business. However, management also outlined a number of longer-term trends -- such as consumers looking for greater value from their spending -- that will help the business continue to expand.
Obviously, the conservatism concerned investors in the early part of the day. They may have been particularly worried that the March-quarter earnings were forecast to be below analysts' current estimates. However, it appears that the bigger picture -- and the analyst-topping full-year earnings outlook -- may have won out in the end, as shares climbed in late trading.
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