Why Lumber Liquidators (LL) Stock Fell After Q1 Results
Zacks Investment Research | May 12, 2016 09:21PM ET
Shares of Lumber Liquidators Holdings, Inc. (NYSE:LL) continue to plunge amid lackluster financial results and allegation of selling Chinese flooring laminates containing much higher formaldehyde levels than approved. In fact, the stock has fallen more than 56% over the past one year.
Earlier, the Centers for Disease Control and Prevention (CDC) announced that the risk of cancer from the company’s flooring products is much higher than reported earlier. The study found high levels of formaldehyde, a well known carcinogen, in the company’s flooring products.
Per CDC, exposure to the company's laminate flooring may cause cancer in 6 to 30 people per 100,000 as against the previous estimate of 2 to 9 persons per 100,000. The use of Chinese laminate flooring may increase respiratory problems for people suffering from asthma and lung disease. Even healthy people may face problems such as eye, nose and throat irritation.
Lumber Liquidators has been in troubled waters since a report aired on 60 Minutes on Mar 1, 2015, accused it of selling Chinese flooring laminates containing formaldehyde levels that do not meet California’s emission standards.
Dismal Quarterly Numbers Weigh on Stock
Ever since Lumber Liquidators reported dismal quarterly numbers on May 10, the company’s shares have tanked nearly 14%. Notably, this is the seventh consecutive quarter in which the both the top line and bottom line of the company have missed the Zacks Consensus Estimate.
In the first quarter of 2016, the company posted a loss of $1.20, much wider than the Zacks Consensus Estimate of a loss of 27 cents. In the first-quarter of 2015, the company’s losses were 29 cents per share.
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