I am thoroughly amazed that LF isn't down 25% AH. After about 10 quarters of beating both top and bottom line estimates AND generally raising guidance, LF has finally lowered guidance and missed top line estimates...and the same 10% sell off that always happens just happened. Tomorrow could very well get much worse, but I will be keeping an eye on premarket and planning to buy in the low 7s (high 6s if it comes to that). If this is how the market reacts to the worst guidance they've given in years, I think we're looking at a bottom.
Because the guidance is complete and total bull puckey. You'd have to be an idiot to believe that LF is going to make $.36 normalized EPS this year. Double that and you'll be in the ballpark. These guys are playing games to buy shares on the cheap.
Tomorrow could very well get much worse, but I will be keeping an eye on premarket and planning to buy in the low 7s (high 6s if it comes to that).
Don't forget the PPS was at 11.50 in August and with a PEG of less than one, money in the bank, no debt and they just beat earnings est. this stock is still worth more than today's closing price, give it time. If you are going to add I always pay attention to the volume. The lower volume can indicate a bottom so you don't catch that falling knife. Good Luck ! Be careful of pre-market and the first hour of day trading. To much emotion in those early trades.
too much emotion in those early trades is exactly why I prefer to jump in bright and early. LF has never been one to trade have particularly heavy volume in AH, but as soon as the bell rings I could see this thing dropping to the low 7s/high 6 range and thats when I'm pulling the trigger. 1.5 tangible book and the low PEG you mentioned would make this an obvious buy, so I'll be up early with my finger on the trigger.
In 3 months, LF will have around $4/share in cash with no real debt which puts in a floor for the shares since anyone with half a brain would pay $1 for more than $1 in cash which is what would happen if the share price fell below $4.
If the company trades for close to cash on hand while making money, it's worth buying all you can in my opinion. I doubt it will get into the $6s even with this #$%$ guidance but if it does, it's a steal in my view. It's under 2 x cash for anything under $8 and generating $1+/share/year in free cashflow.
Management is horribly obtuse with their accounting gimmicks like intentionally shifting advertising expenses quarter to quarter to beat estimates and fooling around with deferred tax assets/valuation allowances/releases of valuation allowances but when the $$ in the bank account keeps rising, all that falls away at some point.
While I will admit that LF has, on occasion, shifted around some things to beat earnings, they generally beat by a pretty wide margin. At the end of the day, top line can't be maniupulated in the way that EPS can, and until now they have consistently beaten top line estimates. That is where most of my concern lies, but as you mentioned, the balance sheet alone makes this a buy if it is to enter the 6 range. If LF ever traded for cash, all other things remaining equal, I'd mortgage my home and sell my car to buy shares. Since I don't think that will happen I will buy in the low 7s tomorrow during the emotional sell off that is sure to come. To be honest, I'm a little light on other investments right now so I'd love to see the market as a whole sell off and drive the price down that extra 50 cents to make this bad boy an instant (by instant I mean a few days) moeny maker.