Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.
Peter Keith of Piper Jaffray recently met several senior members of Lumber Liquidators' management team, including interim CEO Tom Sullivan, to discuss the company's "Back to Basics" operating initiatives.
ENTER TO WIN $500 IN STOCK OR CRYPTO
Enter your email and you'll also get Benzinga's ultimate morning update AND a free $30 gift card and more!
'State Of Flux' For Lumber Liquidators
Keith's observations led him to conclude that Lumber Liquidators' product offering is in a "state of flux" for three reasons.
First, it is bringing in new laminate products from Europe and is still waiting for additional SKUs. Second, the company is still in the process of looking for new sources of engineered hardwood that would not fall under anti-dumping duties recently assessed to certain products from China. Third, the 30 percent reduction in flooring SKU count will "pressure" the firm's gross margins over the coming months, while the company is still holding nearly $20 million worth of Chinese laminate that will ultimately be written down.
FREE REPORT: How To Learn Options Trading Fast
In this special report, you will learn the four best strategies for trading options, how to stay safe as a complete beginner, a 411% trade case study, PLUS how to access two new potential winning options trades starting today.Claim Your Free Report Here.
Gross Margins
Keith expanded on Lumber Liquidators' gross margins, noting that the current dynamic remains "very fluid" and longer-term gross margin profile could be estimated. The analyst is expecting a 300 basis point change to the company's long-term margins at 36-37 percent, which is below the company's own 2015 gross margin (pre-60 Minutes) of 39-40 percent.
Bottom Line
Nevertheless, Keith stated that he likes the new business model and initiatives (such as consolidating the tools area, eliminating 120 flooring SKUs, lowering the shelf height at the front of store to offer an improved visual glance of the entire store, creating a new liquidation section, etc.) that can help support management's growth plans and open 20-25 new stores in 2015. In addition, the recent hiring of Jill Witter as chief compliance office is a "significant upgrade" from its previous head of compliance.
Bottom line, Lumber Liquidators has "no shortage" of legal and regulatory risk, and the company's business model is in a "transitional state" that is "likely to cause volatility" to near-term results.
Shares remain Neutral rated with an unchanged $13 price target.
Image Credit: By Dwight Burdette (Own work) [CC BY 3.0], via Wikimedia Commons
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.