Why Tile Shop Holdings, Inc. Shares Dropped and Then 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 Tile Shop Holdings (NASDAQ: TTS  ) were down as much as 17% this morning following the company's earnings release but finished 7% higher as shares soared in the afternoon

So what: The specialty tile retailer came up short on the top and bottom lines as sales grew 13.3% to $64.4 million, and earnings improved to $0.09 a share. Analysts had expected $67.4 million and $0.11, respectively. Management said sales were affected by "harsh winter weather conditions" as same-store sales fell 2.3% in the quarter. For the full year, Tile Shop expects to open 20 new stores and sees a same-store sales increase of 4%-6% and EPS of $0.41-$0.45, in line with estimates at $0.44. 

Now what: Given the weak quarter and average outlook, Tile Shop's jump this afternoon was a bit of a mystery. Shares of fellow flooring retailer Lumber Liquidators  (NYSE: LL  ) were down as much as 8% this morning on its own underwhelming earnings report before recovering to positive territory as the two stocks tracked in tandem. Apparently, investors saw a buying opportunity on these two embattled high-growth housing plays, and they pounced. With ambitious store expansion expected from Tile Shop, there was certainly an argument this morning that the shares were undervalued, but I wouldn't jump in unless I saw solid growth from the housing market once again. 

Will this stock be your next multibagger?
Give us five minutes and we'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks one stock with amazing potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303%! You don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.


Read/Post Comments (1) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 01, 2014, at 10:54 AM, MrOrdinary wrote:

    "Tile Shop's jump this afternoon was a bit of a mystery."

    Given that MDP recommended buying shares at around the time of the price turnaround, there appears to be at least one clue to this mystery.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2938149, ~/Articles/ArticleHandler.aspx, 9/22/2014 10:33:18 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement