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Analyst Sees Tile Shop Missing Estimates Again

Analyst Sees Tile Shop Missing Estimates Again
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Piper Jaffray said in a note that Tile Shop Hldgs, Inc. (NASDAQ: TTS) could report below-consensus comps and earnings per share for the third quarter and also guide the full year down. The firm said a potential third-quarter miss would represent the third miss in four quarters, and therefore, would likely impact share price for a while.

As such, Piper Jaffray downgraded shares of Tile Shop from Overweight to Neutral and lowered its price target from $19 to $14.

At the time of writing, Tile Shop shares were being hammered down 17.01 percent to $12.20.

Analyst Peter Keith attributed his muted third-quarter expectations to the substantially high number of out-of-stocks witnessed at multiple stores. The analyst noted that the company is currently in the process of rolling out 300+ new SKUs and is rearranging stores to accommodate them.

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Based on checks, the analyst noted that there has been a wide range of stock-outs in stores, as they await new products, with the stock-out/remodel period going on for about a month. Additionally, the analyst said he expects the product roll-out to extend over a couple of months and possibly into 2018.

"All in, with notable gaps in product assortment, and unfavorable store appearance, we believe sales weakness could impact Q3 with some continuation into Q4," the analyst said.

Piper Jaffray also made note of other deterrents such as moderation in existing home sales and elevated promotional activity, exerting pressure on gross margins.

As such, the firm lowered its third-quarter comp estimate from 4 percent to 1 percent, reflecting a reduction of about 20 transactions per store. The consensus estimate calls for comps of 4.2 percent. The firm also lowered its earnings per share estimate for 2017 to 48 cents and for 2018 from 64 cents to 57 cents.

Related Headline: Tile Shop Shares Down 17% Following Piper Jaffray Downgrade To Neutral

Latest Ratings for TTS

Oct 2017CitigroupMaintainsNeutral
Oct 2017Loop CapitalMaintainsHold
Oct 2017CitigroupMaintainsNeutral

View More Analyst Ratings for TTS
View the Latest Analyst Ratings

Posted-In: Earnings News Guidance Downgrades Price Target Previews Analyst Ratings Movers Best of Benzinga


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