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Factors Influencing Lumber Liquidators (LL) in Q1 Earnings

Zacks Equity Research

Lumber Liquidators Holdings, Inc. LL is slated to report first-quarter 2019 results on Apr 30. The company’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters.

How Are Estimates Faring?

The Zacks Consensus Estimate for the first quarter is pegged at a loss of 14 cents, implying an unfavourable comparison with the loss of 7 cents reported in the year-ago quarter. Notably, the consensus mark has been stable in the past 30 days.

The consensus estimate for revenues currently stands at $270.1 million, indicating an increase of roughly 3.2% from the year-ago quarter’s reported figure. Significantly, total revenues of this Virginia-based company inched up 3.5% year over year in the last reported quarter.

Let’s delve deeper into the factors impacting the upcoming quarterly results.

Lumber Liquidators Holdings, Inc Price and EPS Surprise


Lumber Liquidators Holdings, Inc Price and EPS Surprise | Lumber Liquidators Holdings, Inc Quote

Factors at Play

Lumber Liquidators has been grappling with tariff-related headwinds of late. In this regard, the company is on track with its pursuit of measures that include cost-containment efforts, supply-chain initiatives and the ramp-up of omni-channel capabilities. Despite these strategic moves, the company anticipates a tariff imposition of 10% to significantly impact consumer demand and costs in 2019. In fact, management expects comps to decline in low-single digit during first-quarter 2019 due to the afore-mentioned factors.

Given this challenging backdrop, the company seeks to optimize costs and sales via a string of stringent pricing actions. These apart, it focuses on lowering its SG&A costs to improve margins and in turn boost profitability in the upcoming quarterly release. 

However, the company is progressing well with its plans to accelerate growth in its installation and pro businesses. Notably, both accounted for 12% and 29% of the company’s total sales, respectively, in the fourth quarter 2018. Further, management remains optimistic about its uptick in the to-be reported quarter.

Moreover, Lumber Liquidators is gaining traction from strength in the vinyl category. With more and more consumers shifting their preferences to hard surface flooring, the company expects to continue with this positive momentum in the first quarter as well. This will also likely aid its top line, despite persistently soft performances in other categories like bamboo and exotic solid.

What the Zacks Model Unveils

The proven Zacks model does not conclusively show that Lumber Liquidators is likely to beat earnings estimates this quarter. A stock needs to have both — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Lumber Liquidators has an Earnings ESP of 0.00% and a Zacks Rank #3, which makes surprise prediction difficult. 

Stocks With Favorable Combination

Here are a few companies worth considering as our model shows that these have the right combination of elements to beat estimates this time around:

Best Buy BBY has an Earnings ESP of +0.31% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General Corporation DG has an Earnings ESP of +1.51% and a Zacks Rank of 3.

Ross Stores ROST has an Earnings ESP of +2.20% and is a Zacks #3 Ranked player.

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