Liquidity Services (LQDT) has seen a significant boost, with its shares surging over 40% on news of top-and-bottom-line beats for the most recent Fiscal quarter. Liquidity Services operates one of the world’s top B2B e-commerce platforms for surplus assets and is known for its contributions to green initiatives and waste reduction. The company credits its financial success partly to an increased number of participants in equipment auctions and innovation investments.
Pick the best stocks and maximize your portfolio:
- Discover top-rated stocks from highly ranked analysts with Analyst Top Stocks!
- Easily identify outperforming stocks and invest smarter with Top Smart Score Stocks
Key business areas like the Retail Supply Chain Group and GovDeals had notable successes, while the Machinio platform achieved record revenue. Guidance for the next quarter suggests more upside potential, likely catalyzing the stock further. It trades at a premium, so investors looking for a GARP opportunity might find this an intriguing option.
Liquidity Services’ Ramping Up Its Reach
Liquidity Services is a global pioneer in B2B e-commerce for surplus assets having executed over $10 billion in transactions for over five million buyers and 15,000 corporate and government sellers.
The company operates the world’s largest surplus asset marketplace and contributes significantly to sustainability efforts by facilitating asset reuse, minimizing waste and carbon emissions, and reducing landfill disposal. It has been instrumental in executing zero-waste initiatives for its clients, including corporations and government entities, and has successfully diverted billions of pounds of surplus assets from landfills.
Recent operations activities have included the Retail Supply Chain Group’s (RSCG) expansion and relocation of its Indianapolis operations to accommodate increased supply from sellers, improve the customer experience, and reaffirm its commitment to sustainability. Its GovDeals platform completed its largest auction with the sale of Missouri’s Wainwright State Office Building for $8.3 million. Moreover, its CAG segment exhibited its global reach by executing sales from a bankruptcy auction of oil-and-gas machinery in the U.S. to a surplus sale of dairy processing equipment in Indonesia.
Liquidity Sees Strong Performance Across Most Segments
The company recently reported a strong Q4 FY2024 performance, beating top-line and bottom-line estimates. Revenue was $106.9 million, marking a 33.7% year-over-year increase and beating estimates by $13.85 million. The Gross Merchandise Volume (GMV) for Q4 2024 was $361 million, a 14% rise from the $315.6 million reported in Q4 2023. The company’s adjusted EBITDA also increased by 13% to $14.5 million.
Liquidity has reported significant growth in its individual segments. Its RSCG segment saw a 28% increase in GMV and a 49% rise in revenue, reaching new quarterly record highs. The GovDeals segment reported a 14% growth in GMV and a 26% increase in revenue, while the Machinio segment experienced a 13% rise in revenue. The CAG segment, however, saw a 2% decrease in GMV and a 17% drop in revenue.
GAAP net income of $6.4 million marked a slight increase from last year’s period. Non-GAAP adjusted net income stood at $10.2 million ($0.32 per share), an increase from the previous year’s $8.4 million ($0.26 per share) and surpassing expectations by $0.04.
Liquidity’s management has given guidance for the first quarter of FY25, projecting a Gross Merchandise Volume (GMV) of $350 million to $385 million. They anticipate GAAP net income to range between $2.5 million and $5.0 million. Non-GAAP adjusted EBITDA is predicted to be from $9.5 million to $12.5 million. The GAAP diluted earnings per share (EPS) estimate is $0.08 to $0.16, while non-GAAP Adjusted diluted EPS is expected to be $0.18 to $0.26, compared to consensus projections of $0.22.
Better Than Expected Results and Projections
The stock has increased by over 104% in the past year. It trades at the top of its 52-week price range of $13.99 – $34.89 and shows ongoing positive price momentum by trading above all major moving averages. The firm trades at a relative premium with a P/S of 2.98x, north of the Industrial sector average of 1.57x.
Analysts following the company have been bullish on LQDT stock. For example, Barrington’s Gary Prestopino, a five-star analyst according to Tipranks’ ratings, raised the price target on the shares to $40 while maintaining an Outperform rating following the fourth quarter earnings. He noted that Q1 guidance was “better than expected” and increased his FY25 EBITDA estimate.
Based on two analysts’ recent recommendations, Liquidity Services is rated a moderate buy overall. Their average price target for LQDT stock is $38.50, representing an 8.33% upside from current levels.
Bottom Line on LQDT
Liquidity Services has enjoyed a significant boost, with share prices surging due to excellent fiscal results. The company’s success is attributed to the increased participation in equipment auctions across key sectors like the Retail Supply Chain Group and GovDeals. Despite trading at a premium, the company’s strong performance and the potential for further growth pose an intriguing prospect for investors who don’t mind paying up a little for a growth opportunity.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
