Liquidity Services Shares Surged: What You Need to Know
What: Shares of online auctioneer Liquidity Services (NAS: LQDT) soared 25% in intraday trading Thursday after announcing plans to buy Jacobs Trading's consumer goods remarketing business.
So what: The move should allow Liquidity Services to add significantly to its consumer business, as well as expand its relationship with retail behemoth Wal-Mart (NYS: WMT) . Given the stock's huge jump, investors wholeheartedly agree with the strategy and the $140 million purchase price ($80 million in cash, $20 million in stock, $40 million in a seller promissory note).
Now what: Don't let today's pop keep you from following the stock. Jacobs Trading has grown its top-line at a consistent 20%-plus clip over the past several years and is expected to add per-share earnings of $0.28-$0.33 to Liquidity's 2012 results. With its PEG ratio still sitting at a reasonable 1.0, Liquidity Services is certainly worth looking into.
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