Why Quanex Building Products' Shares Jumped
Dec 21st 2012 6:16PM
Updated Dec 21st 2012 6:18PM
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 Quanex Building Products fell as much as 11% today after the company reported earnings.
So what: The company reported fiscal fourth-quarter revenue 0.9% higher than a year ago at $235 million, below the consensus estimate of $244.9 million. Earnings per share of $0.05 were far below estimates of $0.21, which triggered the massive sell-off today.
Now what: For the full year, revenue fell 2.3%, so the company isn't hitting on all cylinders. The company is hoping the industry returns to more normal conditions next year, but that depends on having a lot of factors coming together to help the economy improve. I think the stock is worth staying away from until we see solid growth and profits return to normal levels. Even at current estimates, shares trade at 35 times next years earnings, which is a steep price for a company that isn't growing.
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The article Why Quanex Building Products' Shares Jumped originally appeared on Fool.com.Fool contributor Travis Hoium has no positions in the stocks mentioned above. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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