Why Lumber Liquidators Shares Soared

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 Lumber Liquidators (NYSE: LL  ) were headed for the treetops today, gaining as much as 17% on a bullish earnings report.

So what: Housing stocks have been roaring back this year, and Lumber Liquidators is no exception. Top and bottom lines came in well ahead of expectations, with a $0.46 EPS topping estimates of $0.33, and revenue of $204.3 million beating expectations by $15 million. Net income jumped 91%, and sales were up 19%. The numbers were boosted by a 5.7% gain in new home sales in September, the fastest such increase since April 2010. The hardwood-flooring expert also raised EPS guidance for the year from a range of $1.30-$1.42 to a range of $1.53-$1.59, and it bumped up sales expectations by about 5%.

Now what: Shares of Lumber Liquidators have about tripled this year and remain expensive at a P/E around 38. The recent growth seems largely cyclical, so investors may want hang on and enjoy the ride as the housing market comes back, but look for this stock to take a hit if homebuying tails off.

Don't get taken to the woodshed. Keep track of any Lumber Liquidators news by adding it to your Watchlist here.

Jeremy Bowman has no positions in the stocks mentioned above. The Motley Fool owns shares of Lumber Liquidators. Motley Fool newsletter services recommend Lumber Liquidators. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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