Is The Lumber Liquidators Push Over?

Image by: Lumber Liquidators
By Steven Morrison II

Chances are that if you’re a sports fan, you are probably familiar with Lumber Liquidators, or at least their logo. You’ve undoubtedly seen it plastered all over the sports spectrum, including NASCAR and the NBA, to name but a few.

The high-profile retailer sells flooring materials and related materials in both Canada and the United States. You know, hard wood products, laminates, glues, etc. – stuff like that. They have more than two hundred stores in their pipeline and do a healthy bit of business.

Well, as of late, Lumber Liquidators (LL) has been making a name for itself in another arena. Namely, the stock market, where it has covered all sorts of ground. Stunning amounts of ground.

Over the past year and a half, the stock has soared from $15 to $56 as of close today.

Now the big question is, has it peaked? Is the ride over? Should investors look elsewhere?

“I believe the stock has gotten ahead,” says Seeking Alpha‘s Josh Arnold, who points to things like the fact that Lumber Liquidators sells a much higher percentage of manufactured flooring such as laminates than it used to.

This is meaningful as the margins are much smaller with that product versus wood flooring. Those chickens will come to roost soon, thinks Arnold. The data also suggests that LL’s per-store average has dropped significantly, possibly another sign of trouble ahead.

The signs appear to point to the LL-train derailing sometime soon. If you are currently on board, you might think about getting off.