Why Tile Shop Holdings Inc. Stock Jumped 10% This Morning
Two months ago, flooring manufacturer Tile Shop Holdings (NASDAQ: TTS) was rewarded with a 13% pop in share price on news that it had grown its Q2 sales 4% -- despite seeing its same-store sales decline 2%. Today, rumors that its comps figures might soon turn around were enough to ignite another fire under Tile Shop's stock, lifting the shares more than 10% in early trading.
Those shares later slid back, to enjoy only about a 4.1% gain as of 1:40 p.m. EDT on Tuesday. But why did they pop in the first place?
As best as I can tell, the only new development moving Tile Shop shares today was an upgrade out of equity research firm CJS Securities, based in White Plains, N.Y., arguing that comps at Tile Shop could be "nearing a positive inflection point."
That "news" -- coming from an analyst that I'd bet even money you've never heard of -- apparently was taken as gospel by Tile Shop investors. Or at least it was early today.
As the day wears on, however, and the Tile Shop's stock price falls back, my hunch is that investors are starting to realize that they've never heard of CJS Securities before. They might also have noticed that while StreetInsider.com, which reported the analyst's upgrade, confirms that it happened, it did not say how much CJS Securities thinks Tile Shop stock is worth. Nor did StreetInsider explain why, precisely, CJS thinks that Tile Shop's comps are "nearing a positive inflection point" -- or when that point might arrive.
Will it arrive, for example, in time for Tile Shop's next earnings report? Tune in again a month from now to find out.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Tile Shop Holdings. The Motley Fool has a disclosure policy.