Lumber Liquidators Shares Dropped: What You Need to Know

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 hardwood flooring retailer Lumber Liquidators Holdings (NYSE: LL  ) dropped as much as 13% today after its quarterly results and full-year outlook disappointed Wall Street.

So what: The company's fourth-quarter revenue growth of 14% managed to top estimates, but a miss on the bottom line -- EPS of $0.30 versus the consensus of $0.35 -- is triggering concerns over its long-term profitability. Of course, Lumber Liquidators shares have been on fire over the past couple of months, so a hiccup shouldn't come as a big surprise.

Now what: Management now sees 2012 EPS of $1.05-1.20 on revenues of $710 million-$740 million, below the EPS consensus of $1.23 on a top line of $753.80 million. "Though we remain cautious in our near-term outlook due to potentially volatile consumer demand for large-ticket discretionary purchases," CEO Robert Lynch said, "we have launched significant initiatives that we expect will provide cumulative benefits in the coming years." With the stock still trading at a reasonable forward P/E, I'd consider using today's pullback to bet on that optimism.

Interested in more info on Lumber Liquidators? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Lumber Liquidators. Motley Fool newsletter services have recommended buying shares of Lumber Liquidators. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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10/21/2016 4:02 PM
LL $19.22 Up +0.12 +0.63%
Lumber Liquidators CAPS Rating: ***