What Happened: Shares of pool products retailer Leslie’s (NASDAQ:LESL) fell 14.4% in the morning session after the company reported third quarter results with its profitability taking a hit as its gross margin, adjusted EBITDA, and EPS missed Wall Street's expectations. Its full-year 2024 earnings forecast also underwhelmed. Management cited a challenging macro environment - commentary that is consistent with what we've observed in retailers that sell expensive goods whose purchases are non-recurring, like furniture.
On the other hand, Leslie's blew past analysts' revenue expectations this quarter, driven by better-than-expected (but still declining) same-store sales. Overall, the results could have been better.
Following the results, Goldman Sachs analyst Kate McShane downgraded the stock's rating from Buy to Neutral.
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.
What is the market telling us: Leslie's's shares are somewhat volatile and over the last year have had 30 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.
Leslie's is down 62.1% since the beginning of the year, and at $4.63 per share it is trading 72.3% below its 52-week high of $16.72 from February 2023. 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 $213.82.