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Liquidity Services (LQDT) is back on investors’ radar after first quarter earnings showed higher profitability, with net income of US$7.49 million and improved EPS, alongside guidance that points to further earnings strength in the March quarter.
See our latest analysis for Liquidity Services.
At a share price of US$32.51, Liquidity Services has logged a 39.35% 90 day share price return and a 147.41% three year total shareholder return, while the 1 year total shareholder return is roughly flat. This suggests recent earnings strength is aligning with a longer term improvement story rather than a short term swing.
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With the shares up sharply over 90 days and trading below a US$43 analyst target and some intrinsic value estimates, the key question now is simple: Is Liquidity Services still mispriced, or is the market already baking in future growth?
At $32.51, the most followed narrative pegs Liquidity Services’ fair value closer to $41, putting current pricing at a clear discount in that framework.
Secular trends toward sustainability and circular economy solutions are driving more organizations to liquidate and resell surplus assets via specialized marketplaces; this is reflected in record asset listings, expansion into new verticals (construction, heavy equipment), and high client acquisition across government and enterprise sellers. (Steady increase in asset throughput and recurring fee-based revenue streams)
Read the complete narrative.
Curious what sits behind that valuation gap? The narrative leans heavily on gradually rising revenues, thicker margins, and a future earnings profile that assumes a premium P/E. The exact hurdle it sets is anything but modest.
Result: Fair Value of $41 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, this hinges on surplus volumes staying robust, and there is a real risk that tighter inventory management or brands scaling their own resale channels could cap Liquidity Services’ throughput.
Find out about the key risks to this Liquidity Services narrative.
The story changes when you look at Liquidity Services through its P/E ratio instead of fair value estimates. At 33.9x earnings, the shares trade well above both the US Commercial Services industry on 26.1x and an estimated fair ratio of 23.3x. This points to valuation risk rather than a clear bargain, and if sentiment cools, that premium could narrow faster than optimists expect.
