November 29, 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 ) plummeted 18% today after its near-term guidance disappointed Wall Street.
So what: Liquidity Services' fourth-quarter profit and revenue spiked a whopping 77% and 54%, respectively, but downbeat guidance for 2013 reinforces concerns over slowing growth going forward. Operating margins during the quarter even fell to 7.2% from 12.1% in the year-ago period, suggesting that the competitive environment is rapidly intensifying.
Now what: Management now sees full-year adjusted EPS of $2.05-$2.23, versus the average analyst estimate of $2.20. "We believe our continued focus on delivering the breadth of services, geographic coverage and global market data that large enterprises require in the reverse supply chain positions us well for fiscal year 2013," said Chairman and CEO Bill Angrick. With the stock now off about 45% from its 52-week highs and trading at a forward P/E in the mid-teens, contrarians might even want to use today's pullback to buy into that optimism.
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