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 Liquidity Services, (LQDT 1.10%) were getting liquidated by investors today, falling as much as 21% after the company turned in an underwhelming fourth-quarter earnings report.
So what: The salvage specialist missed EPS estimates of $0.45 as adjusted earnings grew just 3%, to $0.41. Revenue, however, came in better than expected, increasing 6%, to $129.1 million, against estimates of $124.5 million. CEO Bill Angrick was positive on the results, saying that during the year, "We enhanced our industry coverage, breadth of services, geographic reach, and global buyer base, which have expanded our addressable market and reinforced our leadership position." However, Liquidity Services kept its overall outlook "cautious," forecasting 2014 EPS of $1.60-$1.76. Analysts had expected a per-share profit of $1.90.
Now what: This was the fifth quarter in a row that the company has issued downside guidance, and shares fell to a 52-week low as a result. Considering the broad market has gained 25% this year, that fact seems to sum Liquidity Services' ugly year. Still, the company seems to be afflicted by cyclical problems such as high unemployment, as opposed to structural problems that would be harder to overcome. With its top line continuing to increase, all hasn't been lost, and the stock may be hitting a bottom. I wouldn't write off this company just yet.