Market Overview

What The World Thinks Of Lumber Liquidators In 6 Charts

Share:
What The World Thinks Of Lumber Liquidators In 6 Charts
Related HD
Todd Gordon's Home Depot Options Trade
Despite Strength, Home Depot Shares Are 'Nearly Full Valuation'
Tracking Ken Fisher's Fisher Asset Management Portfolio - Q4 2016 Update (Seeking Alpha)
Related LL
Why Stocks Move When Execs Cancel Presentation Appearances
Whitney Tilson Goes Short Wingstop, Positive On Lumber Liquidators

A recent special report on 60 Minutes focused on alleged health risks of Chinese-made laminates sold at Lumber Liquidators Holdings Inc (NYSE: LL).

In response to the controversy, analysts at Credit Suisse performed a follow-up investigation on the impact of the story.

Their investigation included a survey of 1,489 homeowners, an assessment of online sentiment among Lumber Liquidators customers and direct conversations with Lumber Liquidators management.

Homeowners Are Aware

The 60 Minutes piece had 13.55 million viewers, and Credit Suisse's survey indicates that 38 percent of homeowners are aware of the story.

ll1.png

Among those that have seen or heard about the story, more than 85 percent indicate that it has negatively affected their perception of Lumber Liquidators.

ll2.png

Only 43 percent claim that they would still consider buying flooring from Lumber Liquidators.

ll3.png

Fallout Only Temporary

Analysts believe the negative reverberations from the 60 Minutes story will only be temporary for the company.

Related Link: Lumber Liquidators Attempting To Rebound

They suggest that three things need to happen in order for Lumber Liquidators to win back customers:

1. There needs to be more research that provides data to customers that Lumber Liquidators products are safe.

2. There needs to be an increase in domestic production of Lumber Liquidators flooring products.

3. There needs to be stricter government oversight of product safety.

According to the survey, lowering prices or offering customers discounts is not a viable short-term solution for the company.

ll5.png

Who Benefits?

The Credit Suisse survey indicates that, for now, many Lumber Liquidators customers will be considering shopping at The Home Depot Inc (NYSE: HD) and Lowe's Companies Inc (NYSE: LOW) as alternatives.

ll4.png

However, Credit Suisse names Mohawk Industries Inc (NYSE: MHK), which holds nearly half of the U.S. ceramic tile market share, as the biggest potential beneficiary from Lumber Liquidators' negative press.

Credit Suisse has an Outperform rating on Mohawk and a $200 price target for the stock.

Image credit: Dwight Burdette, Wikimedia

Latest Ratings for HD

DateFirmActionFromTo
Oct 2016PiperJaffrayDowngradesOverweightNeutral
Aug 2016CitigroupMaintainsBuy
Aug 2016Argus ResearchMaintainsBuy

View More Analyst Ratings for HD
View the Latest Analyst Ratings

Posted-In: Analyst Color Long Ideas Short Ideas Price Target Analyst Ratings Trading Ideas Best of Benzinga

 

Related Articles (HD + LL)

View Comments and Join the Discussion!