Analyst Likes Lumber Liquidators But Shares Sink

New York, NY, Feb. 19, 2010--Investors hammered Lumber Liquidators stock on Thursday despite a fairly upbeat earnings report by the firm. The stock closed down more than 12%.

The company reported fourth quarter earnings of $0.25 per share compared to $0.24 a year ago. Reported results were at the high end of the previously pre-announced $0.23-$0.25 range.

Revenues remain strong in our view, according to analyst Stifel Nicolaus, especially in light of the current economic climate.

Revnues increased 17.6% to $137.1 million. New stores represented the largest piece of the gains, but comparable store sales improved 5.5%.

Store traffic, measured by the number of customers invoiced, steadily improved throughout the year and the trends have remained strong into January, the analyst said.

Guidance for 2010 calls for sales to increase roughly 16% at the midpoint to a range of $620-$645 million.

Stifel estimates 2010 earnings at $1.18 on higher revenues but lower margin on revenue of $631 million.

"By our estimate, most flooring categories experienced double-digit revenue declines in 2009," Stifel said.

"Considering that Lumber's hardwood business was essentially flat and its laminates business doubled its market share of the industry from 3% to 6%, it remains clear to us that the company continues to outperform its peers."