LL recorded a $16M loss on the tentative issuance of 1M shares last quarter for the class action settlement. Even though that's a non-cash event it was based on the trading price at the time the Memorandum of Understanding was reached.
If this trading range keeps up it's possible that LL could record a gain on paper when the shares are issued. Yes, it's not actually too substantive, but based on the current sp that would add about 14 cents to earnings.
Yes, it's a silly thing to be happy about, but anything to help the bottom line is a positive in my view right now since it helps the press headlines and MIGHT help some people realize that it's not a doomsday scenario here.
LL has a strong balance sheet and the March revenues indicate they are beating numbers from last summer.
I'm long here, but you've got to be kidding if you call this "holding up well". I'm stunned that the price has retraced downward this hard after such a positive outcome on the CARB compliance issue. That was the single largest substantive development in the last 2 years and the market, to this point, has basically shrugged off the news. This ran up above $20 per-share after the Lacey violations were settled last fall. Now any good news is met with a barrage of attack articles.
I've thought about trading this around at the current price level, but ultimately I've told myself that I really need to buy-and-hold here.
It's just silly to trade this stock in my opinion. We're looking at a zero-debt company only trading at slightly more than 1/3 of revenues that has been essentially cleared of any wrongdoing that brought the price down to begin with. Why risk selling now and letting the stock run away from you?
Letting this stock sit-and-stew in a portfolio is going to be a money maker without any question. If LL was saddled with loan covenants and cashflow problems I might feel differently, but that isn't the case.
I'll say this to anybody short here. This is not a short that you want to hold for a long time and it has shown it has been able to gap-higher TWICE within the last month and hold its gains. That is simply not the kind of technical's you want to see if you're short and that has nothing to do with any personal vendetta to anybody short.
There are analyst that have their PT as high as $32 here now. Just sayin'
Yeah, really you make a bigger percentage going long. Example: if a stock trades in a $10-$15 trading range you make 50% going long at 10, but you only make 33% going short at 15. You're going to make way more money going long on a range-bound stock.
Beyond that, the worst you can lose going long is 100%. Your losses on a short could be theoretically limitless.
If you deduct extraordinary expenses for: Air testing (2.9M) Transporting "tainted flooring" to a warehouse (1.6M) and the added SG&A from Legal and Settlement costs (29.5M) LL would have shown a loss of $7.1M ($0.26 per-share) last quarter.
If LL equals the revenues from the chart on EDGAR during each month in Q2, that will result in a $257M quarter. BEATING the comp YOY, and adding $7.6M to gross profits sequentially. That is enough to push LL into profitable territory when normalized.
The settlement costs are already factored into the balance sheet at this point and legal and professional costs should finally begin to decrease.
LL will BEAT comps and have positive normalized earnings Q2.
I feel a lot more comfortable holding a long position than I would being short. Without the legal liabilities from CARB compliance I think it's actually plausible for a Home-Depot, Lowe's, or private equity firm to consider a buyout offer. The current SP is well under one-half of revenues. That is incredibly cheap in relation to any other comparable building materials retailer.
I think years is an exaggeration. The public forgets and/or assumes that actions have been taken to fix the problem after a scandal. People are constantly hearing about safety issues on the news, even from respected companies often.
Spring is a strong season for flooring sales and LL did $86M in March.
If they equal that number in each month this quarter that's $258M in revenues versus $248M last year.
LL will have positive comps for sure and end the naysaying.
Anybody doing their due-diligence researching this will come to the realization that the "smoking-gun" is failing to materialize against LL. Any sign that comps are going to improve will be the death-knell of a short thesis.
A return to profitability will double or triple the sp.
There's nothing stopping this from going higher into earnings.
I guarantee there are a few that already know what Q1 revenues were and the stock is doing well. I hate using a cliche, but we saw the same trading action before the announcement that LL won the Prop 65 case and I said it was a canary in a coal mine. There are undertones in what we're seeing now.
Yeah, LL is doing a Billion in revenues but it's only worth about 3x the settlement for Hulk Hogan's sex tape. That isn't an often used metric, but I think it's an indication that Mr. Market has this one under priced.
That's my long thesis almost identically. Without the bogey of any product liability issues this is worth 2x-3x the current sp.
This continues to trend higher without any news. Somebody is accumulating here and the trading action indicates that longs are content holding or adding. There is no selling conviction when this goes red and these green-shoots continue to happen, legitimizing the trading range creeping higher.
I've been investing for a long time and this is exactly the trading action you'll see before something breaks higher. I have little doubt that this reaches a $15 "normal" before Q1 earnings.
Yeah, that's just silly to expect a catastrophic outcome now. The big-judgment and product recalls are failing to materialize and there's almost no chance they will. LL has no debt on the balance sheet, so there's no plausible chance of a doomsday scenario here.
Any reasonable person would be covering on the dips right now and unwinding their position if they were short.
Yeah, the pull-back was on paltry volume. I think small-time traders are thinking $13 is "safe". When substantial trading volume happens this is running up quickly.
These little green shoots could be a canary in a coal mine.
Spring is a strong season for flooring. It's safe to assume that LL will at-least equal March revenues in each month this quarter. That would make Q2 revenues $258M or more versus $248 a year ago.
When LL reports beating revenues yoy and sequentially the pundits that never actually delve into the details will be reporting that we have "turned the corner", even though that's already apparent from the Q1 report if you actually read it. We may even beat Q1 2015 revenues. A quarter where LL was mostly unscathed from newcarsmellgate.
This goes higher from here without a doubt. LL being absolved from any CARB violation has removed a tremendous amount of potential legal liabilities for them AND has proven the "60 Minutes" special to be a farce.
This isn't just price action here. There is finally some real substance to move this higher. A typical revenues multiplier for the peer group could easily push LL into the ~$40 range. This goes to $20 on trading action alone.
Sentiment: Strong Buy
Yeah, I've been hearing some radio ads for LL here in mid-Missouri.