Why Newport's Shares Popped
Aug 2nd 2012 2:58PM
Updated Aug 2nd 2012 3:04PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of technology company Newport (NAS: NEWP) rose as much as 17% in early trading after the company released earnings.
So what: Revenue actually fell short of estimates, growing 18% to $153.7 million, but analysts expected $157.7 million. But investors are overlooking that miss and focusing on the bottom line where earnings per share of $0.24 were $0.06 ahead of estimates.
Now what: Sales were up year over year, but SG&A expenses ate up the additional profit that came, accounting for the fall in earnings from last year. The earnings beat was encouraging but I would like to see better margins and earnings headed up instead of down before buying. A forward earnings multiple of 9.2 isn't terribly expensive so, with some improvements in operations, this company could become a good buy.
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The article Why Newport's Shares Popped originally appeared on Fool.com.Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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