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Bear of the Day: Lumber Liquidators (LL)

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Lumber Liquidators (LL - Free Report) is a leading U.S. specialty retailer of hard-surface flooring. LL shares have tumbled over 40% this year even as its industry climbed 36%.

The company did top our Zacks Q3 earnings estimates on November 3. But the flooring company’s adjusted earnings outlook has turned worse since then and LL stock fell again on Monday.

The Quick LL Lowdown

Lumber Liquidators is a top hard-surface flooring retailer, with over 400 stores around the U.S. The company sells more than 500 varieties of hard-surface flooring, ranging from vinyl plank and solid hardwood to bamboo and cork and beyond.

The coronavirus turned 2020 into a banner year for the housing market and that strength continued in 2021. The backdrop helped home builders and home-based spending retailers like Home Depot (HD - Free Report) and many others thrive. Despite the accommodating setting, LL’s revenue popped only 0.5% last year, after it took a big hit during the second quarter amid the height of lockdowns.

Lumber Liquidators Q3 FY21 revenue then fell 4.6%, as DIY (do it yourself) shopping slipped. Luckily, its fiscal 2021 sales are still projected to climb 6% to $1.16 billion, based on our current Zacks consensus estimates. Peeking further ahead, its FY22 revenue is expected to come in another 2% higher.

Despite its projected top-line expansion, LL’s adjusted FY21 earnings are expected to tumble 45% from a year ago to $1.26 per share and then fall another 13% in 2022. And, of course, the company is being negatively impacted by the “challenging supply chain and inflationary environment.”


Zacks Investment ResearchImage Source: Zacks Investment Research

Bottom Line

Analysts have lowered their earnings outlooks for Lumber Liquidators since its early November financial release. The downward revisions trend helps LL land a Zacks Rank #5 (Strong Sell) at the moment. On top of that, the nearby chart shows how rough things have been for the stock over the last several years, if you exclude the covid rally.

Lumber Liquidators is currently trading below both its 50 and 200-day moving averages and it has been unable to regain any momentum, even as the market climbs to new records. Therefore, investors might want to consider turning their attention to other stocks within the broader home-improvement/building materials space.

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The Home Depot, Inc. (HD) - free report >>

LL Flooring Holdings, Inc. (LL) - free report >>