Is This a Head Fake For Lumber Liquidators Earnings?

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Lumber Liquidators Holdings, Inc. (NYSE: LL) reported fourth-quarter financial results before the markets opened Tuesday. This earnings report was much stronger than the previous report, and could prove to be a turning point for the stock, but this always seems to be the sentiment when the company gets one quarter right. The stock is still significantly below its 2015 levels, before the shares fell.

Although these earnings were better than expected potentially prompting a short squeeze, the company is still losing money, and the balance sheet is getting weaker by the quarter.

The company reported that it had a net loss of $0.20 per share and $244.9 million in revenue, versus consensus estimates that called for a net loss of $0.31 per share on $242.21 million in revenue. The same period from last year had a net loss of $0.73 per share and $234.81 million in revenue.

During the quarter, comparable store net sales increased 2.8%, reflecting a 3.0% increase in average sales slightly offset by a 0.2% decrease in customers invoiced.

On the books, cash and cash equivalents totaled $10.3 million at the end of the quarter, versus $26.7 million in the same period from last year. The company also had $90.7 million available under its revolving credit facility at the end of 2016.

Dennis Knowles, CEO of Lumber Liquidators, commented:

We are pleased with our sales performance during the quarter, posting our second consecutive increase in comparable sales. While this represents a further step in the right direction, we remain focused on improving our business to drive long term value for Lumber Liquidators shareholders. Our recent investment in a broader, trend-right assortment supported by deeper inventory reflects our commitment to serve our customers. As a part of our strategic direction, we invested in our store operations and the development of both installation and pro-customer programs. We continue to believe the strategic direction we set for the Company remains sound, and we are committed to driving the actions that will return the Company to profitability.

Shares of Lumber Liquidators were last trading up 18% at $18.13, with a consensus analyst price target of $14.61 and a 52-week trading range of $10.01 to $20.10.