Why Liquidity Services, Inc. Shares Got Walloped

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 25% today after its quarterly results and outlook disappointed Wall Street.

So what: The stock has plummeted over the past year on deteriorating fundamentals, and today's Q3 results -- EPS of $0.26 missed the consensus by $0.09 on a revenue decline of 1.5% -- coupled with downbeat guidance only reinforce that trend. In fact, Liquidity's Gross Merchandise Volume fell 12% over the year-ago period to $128.3 million, suggesting that its competitive position continues to weaken.

Now what: Management now sees full-year EPS of $1.10 to 1.27, versus the Wall Street consensus of $1.65. "Although global economic conditions have improved, our overall outlook remains cautious regarding our commercial capital assets business due to volatility in capital spending patterns," said the Company in a statement. "In addition, our retail supply chain business has seen significant changes in consumer spending habits in certain categories, such as electronics, which has been affected by increases in payroll taxes, continued high unemployment, and reduced innovation in the sector, resulting in decreased spending and decreased pricing in the secondary market, resulting in margin pressure." Of course, with Liquidity shares now off a whopping 70% from their 52-week highs and trading at a single-digit forward P/E, much of that trouble might already be baked into the price. 

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