Everyone blaming legal items for EBF earnings drop is coping hard

[Mark Sterling]

Ngl seeing everyone hype up EBF just because top-line sales grew a bit is giving me massive red flags. The mainstream narrative right now seems to be that earnings only dipped because of "one-off legal items" and that the core business is secretly thriving under the hood. Mate, give me a break. How many times have we seen retail traders eat up the classic "one-time expense" excuse right before a stock bleeds out lower?

Sales growth without net income to back it up is literally just burning money to buy revenue. Sure, Ennis managed to move more product, but if your margins are getting squeezed and management is hiding behind litigation costs to explain away a lousy bottom line, you should be questioning the whole thesis instead of blindly buying the dip. Print and business supplies aren't exactly a booming growth sector to begin with, so relying on top-line vanity metrics feels like pure cope to me.

I know a lot of you guys are holding out for a rebound, thinking this earnings hit is just noise, but I am seriously doubting the bull case here. If a company can't translate higher sales into actual profits for shareholders, why are we pretending the underlying business is in great shape?

Are you guys actually buying this "legal costs" excuse, or is it time to admit EBF is slipping?

 

[Noah Vance BR]

Total cope. Anyone looking at the actual data can see the margin compression started two quarters ago. People just hate admitting their directional bias was wrong.

 

[Liam Walker]

Total cope. Anyone looking at the actual data can see the margin compression started two quarters ago. People just hate admitting their directional bias was wrong.

Spot on @Noah Vance BR. Everyone's scrambling for a neat little narrative because accepting that the core business model is actually stalling just hurts too much. Give it another month and they'll invent some new macro boogeyman to blame instead of just admitting the trend was obvious.