Lumber Liquidators (LL) Blows Out Expectations but Oppenheimer Questions Sustainability
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Oppenheimer analyst Brian Nagel reiterated a Perform rating on Lumber Liquidators (NYSE: LL) noting that the trends continue to strengthen after the company reported earnings per share in Q4 that expanded meaningfully to $1.06 from $0.56 in the prior-year period. This beat the Street forecast of $0.50 on stronger than expected comparable store sales growth of 10.5%, and tight expense management. Comparable-store sales tracked up year-over-year at +10.5% vs. consensus estimates for +8.7%, the second consecutive quarter of comp-store growth in excess of 10%, driven by broad-based demand for home improvement projects.
The analyst stated "LL seems to be undertaking steps necessary to reposition the company within a shifting flooring retail backdrop, which has recently been supported by an exceptionally strong demand for home improvement type projects. That said, LL continues to struggle following several years of underinvestment, heightened competition, and now escalating costs associated with freight and tariffs. As we look through 2021 and consider an outlook for potentially waning sales within home improvement and resultant impacts upon leading retailers, we recommend clients remain on the sidelines until a clearer path toward sustained improvements in sales and profits emerges".
Shares of Lumber Liquidators closed at $23.82 yesterday.
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