Why Proto Labs' Shares Jumped

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 rapid production company Proto Labs jumped 26% today after releasing earnings.

So what: Fourth-quarter revenue rose 31.1% to $33.6 million, beating the consensus estimate of $32.7 million. Earnings per share of $0.31 were way ahead of the $0.26 analysts expected, driven by gross margin rising from 56.8% to 62.5%. 


Now what: When you beat estimates by that margin, your stock often jumps, and when you're leading a rapid manufacturing revolution, it only bolsters the market's opinion about you. That's what drove Proto Labs today.

The question is whether it's still a buy today. Consider that Proto Labs is worth $1.3 billion and generated only $33.6 million in quarterly revenue. I love the margins and I love the business, but that's a steep price, especially in a fast-changing sector. I'd be a seller today.

Interested in more info on Proto Labs? Add it to your watchlist by clicking here.

The article Why Proto Labs' Shares Jumped originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw The Motley Fool recommends Proto Labs. 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.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Learn about investing from the comfort of your own home.

Portfolio Basics

Take the first steps to building your portfolio.

View Course »

Investment Strategies

Learn the strategies you need to build a winning portfolio

View Course »

Add a Comment

*0 / 3000 Character Maximum