Stock Story -
What Happened: Shares of pool products retailer Leslie’s (NASDAQ:LESL) fell 39.4% in the morning session after the company announced underwhelming preliminary fiscal third quarter results. Revenue is expected to come in at roughly $570 million (below consensus estimates of $619m). Adjusted EBITDA is expected to be $108 to $109 million (below estimates of $132m), and adjusted EPS is expected to be between $0.32 to $0.33 (below estimates of 0.42).
Providing more color on the weak guidance, Mike Egeck, Chief Executive Officer, added, "The cold and wet spring weather we experienced during the fiscal second quarter extended through May, reducing the number of pool days in non-seasonal markets and delaying the start of pool season in seasonal markets. We also continued to see weakness in large ticket discretionary categories as persistent inflation and high interest rates pressure pool owners' wallets. We experienced improved sales trends in June, but the April and May revenue impact created negative operating leverage and gross margin headwinds. While we are encouraged by improved June trends, our revised full year outlook at the midpoint assumes third quarter sales performance continues through the fourth quarter."
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Leslie's? Find out by reading the original article on StockStory, it's free.
What is the market telling us: Leslie's (NASDAQ:LESL)'s shares are somewhat volatile and over the last year have had 67 moves greater than 5%. But moves this big are very rare even for Leslie's and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 2 months ago, when the stock gained 18.2% on the news that the company reported first-quarter results. Leslie's beat analysts' full-year earnings guidance expectations. Its EPS also narrowly outperformed Wall Street's estimates. Management expressed strong optimism about the second half of the year, which has historically generated the majority of sales and profits.
On the other hand, its revenue and adjusted EBITDA unfortunately missed analysts' expectations during the quarter. Overall, it was a decent quarter for the company.
Leslie's is down 63.4% since the beginning of the year, and at $2.56 per share it is trading 68.8% below its 52-week high of $8.18 from February 2024. Investors who bought $1,000 worth of Leslie's's shares at the IPO in October 2020 would now be looking at an investment worth $117.28.
