Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Leslie's Tanked 15% in Morning Trading Today

By Reuben Gregg Brewer - May 6, 2021 at 1:59PM

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 pool supply specialist had a decent quarter, and yet the stock didn't go up.

What happened

Shares of Leslie's (LESL 2.63%), a purveyor of pool supplies to retail and professional customers, fell as much as 15% in early trading on Thursday. Although the stock had regained some lost ground by 1 p.m. EDT today, it was still off by roughly 10%. The company's post-close earnings release yesterday was likely behind the dour mood.  

So what

The interesting thing here is that Leslie's appears to have had a solid quarter. Fiscal second-quarter 2021 sales hit a record at $192.4 million, up 52% from the same period in 2020. Adjusted EBITDA came in at $9.5 million, a huge improvement over the negative $8.1 million seen in the year-earlier period. The adjusted quarterly loss was $0.01 per share compared to a loss of $0.18 in the same period of the previous year. The penny per share of red ink, meanwhile, was much better than the $0.09 loss analysts had been expecting.  

A man holding his head with a candlestick chart heading lower behind him.

Image source: Getty Images.

So far, it seems as though the stock should have risen. Adding to that notion is the fact that Leslie's upped its full-year guidance. But during the quarterly earnings call, an analyst noted that the updated guidance seemed a little "conservative." This suggests that investors had been expecting an even better showing from the company than what had been achieved.

This isn't uncommon, often being referred to as a "whisper number." So despite doing better year over year and beating the official Wall Street consensus, Leslie's may still have let investors down. Thus, the stock fell despite what would appear to have been good news.

Rising commodity prices, notably for chlorine, probably didn't help the mood, either, but given the improved year-over-year results, it doesn't seem that this fact alone would have been sufficient to lead to the drop.  

Now what

Investor sentiment can be fickle and hard to track, which is why most long-term investors should probably be thinking about the big picture here. One or two quarters, or even a year, won't dictate the company's true success. In fact, Leslie's made sure to point out that it was seeing an increasing number of new customers, which bodes well for the future even if investors were disappointed with the quarter. Thinking beyond a single quarter, it's worth noting that the company received a number of price target upgrades today.  

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

Leslie's, Inc. Stock Quote
Leslie's, Inc.
$15.97 (2.63%) $0.41

*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
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/12/2022.

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.