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AAA  Jul. 27, 2013
"If you build it…'
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The weak housing market in recent years hasn't been a major problem for Lumber Liquidators. The retailer of hardwood floors and installation services benefited as many homeowners decided to renovate rather than try to sell in a tough market.

The company said Wednesday that its second quarter net income jumped nearly 68 percent from the same period last year. Such results have helped fuel a 120 percent rise in the stock over the last 12 months.

The dramatic climb means that the stock is expensive relative to its earnings per share. Its price-earnings ratio of 41 is well above its 5-yr average P/E of 27. That's a factor in prompting the majority of the 12 analysts polled by FactSet to maintain a "Hold" rating on the stock.

But financial analyst Gary Balter of Credit Suisse maintains an "Outperform" rating. In a note to clients this week he expressed confidence that Lumber Liquidators can maintain its momentum. He cited several factors including a significant improvement in the performance of the chain's older stores. Balter highlighted that the retailer's results aren't entirely dependent on adding new stores.

He was also encouraged by a boost to the earnings outlook for this year. Balter raised his price target to $105, from $88.

Associated Press
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