Why VeriFone Shares Got Crushed
Feb 21st 2013 3:44PM
Updated Feb 21st 2013 3:50PM
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 electronic payment company VeriFone Systems plummeted 38% today after its first- and second-quarter outlook easily missed Wall Street expectations.
So what: VeriFone's preliminary first-quarter results -- EPS $0.47-$0.50 versus its prior view of $0.73 -- and downbeat second-quarter guidance are forcing analysts to drastically recalibrate their growth estimates. While management blamed the gloomy outlook largely on the economic weakness in Europe, investors are worried that such a wide miss suggests far more serious internal and competitive challenges.
Now what: Management now sees second-quarter EPS of $0.45-$0.50 on revenue of $435 million-$450 million, well below Wall Street's view of $0.80 and $517 million. "While we are disappointed with our performance and execution, we have a firm grasp on the challenges we faced and are taking aggressive steps to strengthen our competitiveness over the long-term," said CEO Douglas Bergeron. "We are confident in our ability and committed to executing against our strategic priorities to drive shareholder value." With the stock now off a whopping 65% from its 52-week high and trading at a forward P/E of 5, betting on that turnaround talk might even be worth looking into.
Interested in more info VeriFone? Add it to your watchlist.
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The article Why VeriFone Shares Got Crushed originally appeared on Fool.com.Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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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