Why Lumber Liquidators Jumped Nearly 52% in August

Markets Motley Fool

What happened

Continue Reading Below

Shares of Lumber Liquidators Holdings, Inc. (NYSE: LL) skyrocketed 51.9% in August, according to data provided by S&P Global Market Intelligence, after the company reported strong second-quarter results that beat analysts' expectations. 

So what

Lumber Liquidators reported net income of $4.5 million in the quarter, or $0.16 per share, which exceeded analysts' consensus earnings-estimate loss of $0.06 per share.

The good news comes after the company's earnings and share price both have taken a huge hit over the past two years after some of the company's laminate flooring from China was found to be potentially hazardous to people's health. Lumber Liquidators has since discontinued selling the flooring, and has been working to increase the quality of its products, as well as get people back into its stores. 

The second-quarter results proved that the company's efforts are working, as overall net sales increased 10.7% year over year, and net sales in comparable stores increased by 8.8% from the year-ago quarter. Additionally, gross profit increased 38.1% in the quarter, to $97.5 million, and gross margin increased to 37%, up from 29.7% in the year-ago quarter. 

Continue Reading Below

Now what 

Lumber Liquidators didn't give any forecasts for the third quarter, but the company's management mentioned on the second-quarter earnings call that it will continue to focus on building out its flooring installation and Pro Sales teams in order to drive more sales. 

"It's awful early in the third quarter, but we've got a lot going on, in terms of rollout of installation and our focus on the Pro. So we're going to stay in the course," Lumber Liquidators CEO Dennis Knowles said on the call. 

The company has clearly made some significant strides, and investors certainly will be watching the next few quarters very closely. Lumber Liquidators still has to navigate a few more lawsuits stemming from some of its old flooring, but the second quarter proved that the company is nearly back on track.

10 stocks we like better than Lumber Liquidators
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Lumber Liquidators wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of September 5, 2017

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool recommends Lumber Liquidators. The Motley Fool has a disclosure policy.