Looks Like an Overreaction to Me

I've been going through the Liquidity Services (LQDT) report, and I can't help but feel this stock is overdone to the downside and being controlled by the 20% short interest. This quarter was actually pretty strong: On earnings per share, the company came in $0.03 ahead of the $0.37 average expectation, plus it beat handily on revenue. The full-year EPS of $1.86 per share was ahead of targets, and it puts the stock at a year-end price-to-earnings ratio of 19.24x, based on the current $35.80 share price. That gives Liquidity Services a P/E relative to growth (PEG) ratio of under 1.0, which is attractive for a company that's still growing earnings and revenue.

Liquidity Services (LQDT) -- Daily Source: StockCharts.com View Chart » View in New Window »

In my opinion, the issue here is in fiscal first-quarter guidance, along with an overreaction to full-year guidance. The company guided earnings per share to a $0.38 midpoint for the first quarter, whereas expectations are calling for $0.46. Full-year guidance is for $2.14 per share vs. analyst estimates of $2.20. This tells me the guidance for the full year is in line, or expected to be slightly better than current Wall Street estimates....398 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

Read the full story and get access to the Real Money Pro trading floor.

There’s no substitute for a trading floor to get great ideas, so Jim Cramer created a better one at Real Money and blogs there exclusively. We then added legendary hedge fund manager, Doug Kass, with his exclusive Daily Diary and best investing ideas. Staffed with more than 4 dozen investing pros, money managers, journalists and analysts, Real Money Pro gives you a flood of opinions, analysis and actionable trading advice found nowhere else, and allows you to interact directly with each expert.

Already a Subscriber? Please login.

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.