Liquidity Services Shares Dropped, Then Recovered: What You Need to Know

Before you go, we thought you'd like these...
Before you go close icon

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of online auctioneer Liquidity Services (NAS: LQDT) were getting bid down by investors in early trading today before staging an impressive rally. Shares fell as much as 10% in intraday trading, but were up more than 4% at the time of this writing.

So what: It's earnings season and the action in Liquidity Services' shares is due to the company's fiscal-first-quarter earnings report. The numbers for the quarter looked quite good, with revenue rising 35% from last year, while adjusted earnings per share soared by 118%. Better still, both the top and bottom line bested the expectations of Wall Street analysts.

Now what: So why the drop in early trading? That probably had a lot to do with the company's outlook -- which management described as "cautious." The company gave a nod to "volatility in the macro environment" and said it expects that buyers would continue to create pricing pressure in certain areas of the business. However, management also outlined a number of longer-term trends -- such as consumers looking for greater value from their spending -- that will help the business continue to expand.

Obviously, the conservatism concerned investors in the early part of the day. They may have been particularly worried that the March-quarter earnings were forecast to be below analysts' current estimates. However, it appears that the bigger picture -- and the analyst-topping full-year earnings outlook -- may have won out in the end, as shares climbed in late trading.

Want to keep up to date on Liquidity Services?Add it to your watchlist.

At the time this article was published Motley Fool newsletter services have recommended buying shares of Liquidity Services. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners