What Happened:

Shares of pool products retailer Leslie’s (NASDAQ:LESL) jumped 18.2% in the afternoon session after 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.

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What is the market telling us:

Leslie's's shares are somewhat volatile and over the last year have had 59 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 5 months ago, when the stock dropped 14.4% on the news that 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.

Leslie's is down 22% since the beginning of the year, and at $5.46 per share it is trading 51.7% below its 52-week high of $11.31 from May 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 $250.06.

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