Please ensure Javascript is enabled for purposes of website accessibility

Why Lumber Liquidators Stock Fell Today

By Reuben Gregg Brewer - May 5, 2021 at 12:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The flooring retailer got off to a weak start on Wednesday thanks to its pre-market earnings update.

What happened

Shares of Lumber Liquidators (LL 1.04%), a specialty wood flooring purveyor, fell as much as 15% in the first hour or so of trading on May 5. The company, which has changed its public face to LL Flooring, reported earnings before the market opened. Investors weren't pleased at all, though the numbers weren't terrible. As of 11:43 a.m. EDT, the stock was down 14.4%.

So what

Lumber Liquidators reported revenue of $283.5 million in the first quarter of 2021, up roughly 6% from the year-earlier period. Same-store sales grew 6.9%. Digging a bit deeper, merchandise sales rose 4.7%, with the service side of the business (delivery and installation) seeing a jump of 16.8%. Adjusted earnings came in at $0.34 per share.  

A tool box with tools next to a yellow hard hat

Image source: Getty Images.

None of this is particularly bad and the company actually beat analysts' average earnings estimate of $0.24 per share. However, Lumber Liquidators missed on revenue and didn't provide any outlook for the future, citing ongoing uncertainty related to the coronavirus pandemic. These are clear negatives, but probably not enough to lead to the swift price decline all on their own. It's worth noting the stock has gained roughly 200% over the past year (at one point in that span it was up around 400%). Investors clearly priced in a lot of good news after the market started to turn higher following the swift 2020 bear market. It looks like they didn't feel there was enough positive news in Lumber Liquidators' first-quarter earnings report.  

Now what

Long-term investors need to remember that when stocks move dramatically in one direction or the other, it can materially alter the way investors react to company news. It would be hard to suggest that Lumber Liquidators had a terrible quarter, but after such a big share-price advance over the past year, it seems like investors were looking for something more.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

LL Flooring Holdings, Inc. Stock Quote
LL Flooring Holdings, Inc.
LL
$9.67 (1.04%) $0.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
377%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/09/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.