Lumber Liquidators Stock is a Lumber Shortage Benefactor

Monday, May 3, 2021 | Jea Yu
Lumber Liquidators Stock is a Lumber Shortage BenefactorHard-surface flooring retailer Lumber Liquidators (NYSE: LL) stock has been a benefactor from spike in lumber pricing bolstered by the housing boom. The demand for single-family homes continues to far outstrip supply causing homeowners to renovate existing homes. The pandemic spurred the migration out of cities into the suburbs as work-learn-play and engage from home trends continue to remain strong even during the re-opening phase. The elastic office supporting work-from-home is part of the “new normal” in a post-pandemic world. Despite soaring lumber prices, the do-it-yourself (DIY) and home improvement trend should continue to be strong throughout 2021 with low-interest rates and a limited supply of single-family homes. The lumber shortage is adding an extra $36,000 to the cost of a new home, this is pushing customers to select higher-margin alternatives like vinyl. Prudent investors looking to capitalize on this trend can watch shares of Lumber Liquidators for opportunistic pullback levels to consider scaling into a position.

Q4 2020 Earnings Release

On March 2, 2021, Lumber Liquidators released Q4 Fiscal 2020 results for the quarter ending in December 2020. The Company reported earnings per share (EPS) of $1.06 excluding non-recurring items, beating consensus analyst estimates of $0.50, by $0.56. Revenues grew 11.1% year-over-year (YoY) to $304.2 million, beating analyst estimates for $296.51 million. Comparable store sales rose 10.5% YoY credited to strong customer demand from home improvement projects. Due to uncertainty from COVID effects, the Company didn’t provide any forward guidance.

Conference Call Takeaways

Lumber Liquidators CEO Charles Tyson set the tone, “For the fourth quarter, our web sales increased more than 90% versus 2019. We are pleased with the new customer growth. Our investment in digital marketing is delivering. And we are encouraged to see so many customers want to engage online for large ticket purchases.” The Company launched its new digital platform in December 2020 with features like displaying flooring in digital room scenes, floor finder, picture it, free flooring samples and promotion of installation services. “During the fourth quarter, we began testing a new in-store portal for installations that will increase efficiency for our store associates and reduce turnaround time for our customers when quoting new jobs… We remain focused on transitioning from a transactional sales approach to building longer-term relationships and credibility with Pros.” CEO Tyson noted that vinyl is benefitting from the expanded assortment and sees room to grow, “As a high touch, high-surface flooring retailer, we also emphasized selling a complete solution to our customers, adding the necessary higher-margin attachments, such as moldings and other accessories.”

Targeting Pros

The Company plans to continue targeting pros with specialized pro reps. Lumber Liquidators will also focus on targeted television advertising like HGTV to attract new audiences driving them to LLflooring.com for conversion. Stores will also undergo “broad scale” rebranding in 2021. CEO Tyson summed it up, “Residential investment, existing home sales and rising home prices spurred by low interest rates should continue to provide tailwinds.” Prudent investors can patiently monitor shares for opportunistic pullbacks as LL shares indicate a breakdown to lower prices.

Lumber Liquidators Stock is a Lumber Shortage Benefactor

LL Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frames provides a precision view of the near-term playing field for LL shares. The weekly rifle chart formed a bearish inverse pup breakdown with a falling 5-period moving average (MA) at $25.73 and 15-period MA at $26.54. Shares have deflected breakdown attempts at the $23.52 Fibonacci (fib) level. The weekly market structure high (MSH) sell triggered under $29.44. The daily rifle chart is desperately trying to hold above the market structure low (MSL) trigger at $23.94. A stochastic cross down with trigger an inverse pup breakdown towards the daily lower Bollinger Bands (BBs) at $22.84. The dual weekly and daily inverse pups are bearish; therefore, prudent investors need to administer patience and wait for opportunistic pullback levels at the $21.29 fib, $19.72 fib, $17.55 fib, $14.92 fib, and the $12.28 fib. The upside trajectories range from the $29.60 fib up towards the $39.84 fib level.

Featured Article: What is a growth and income fund?



7 Stocks to Watch When Student Debt Forgiveness Gets Passed

Now that the Biden administration is fully in charge, student debt forgiveness has moved to the front burner. Consider these numbers. There is an estimated $1.7 trillion in student debt. The average student carries approximately $30,000 in student loans.

If $10,000 of student debt were to be canceled, there are estimates that one-third of borrowers (between 15 million to 16.3 million) would become debt-free. Of course, if the number hits $50,000 as some lawmakers are suggesting the impact would even greater.

Putting aside personal thoughts on the wisdom of pursuing this path, it has the potential to unleash a substantial stimulus into the economy.

And as an investor, it’s fair to ask where that money would go. After all, there’s no harm in having investors profit from this stimulus as well.

A counter-argument is that the absence of one monthly payment may not provide enough money to make an impact. However, Senator Elizabeth Warren referred to the effect student loans have in preventing many in the millennial and Gen-Z generations from pursuing big picture life goals such as buying a house, starting a business, or starting a family.

With that in mind, we’ve put together this special presentation that looks at 7 stocks that are likely to benefit if borrowers are set free from the burden of student loans.

View the "7 Stocks to Watch When Student Debt Forgiveness Gets Passed".


Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Lumber Liquidators (LL)1.3$23.90+3.5%N/A14.84Hold$23.00
Compare These Stocks  Add These Stocks to My Watchlist 

Free Email Newsletter

Complete the form below to receive the latest headlines and analysts' recommendations for your stocks with our free daily email newsletter:

MarketBeat - Stock Market News and Research Tools logo

MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings, economic reports, financials, insider trades, IPOs, SEC filings or stock splits, MarketBeat has the objective information you need to analyze any stock. Learn more.

MarketBeat is accredited by the Better Business Bureau

© American Consumer News, LLC dba MarketBeat® 2010-2021. All rights reserved.
326 E 8th St #105, Sioux Falls, SD 57103 | U.S. Based Support Team at [email protected] | (844) 978-6257
MarketBeat does not provide personalized financial advice and does not issue recommendations or offers to buy stock or sell any security. Learn more.

Our Accessibility Statement | Terms of Service | Do Not Sell My Information

© 2021 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer. Fundamental company data provided by Zacks Investment Research. As a bonus to opt-ing into our email newsletters, you will also get a free subscription to the Liberty Through Wealth e-newsletter. You can opt out at any time.