October 26, 2010
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 surveillance products specialist China Security & Surveillance (NYSE: CSR ) plummeted as low as 17% in intraday trading after its quarterly results and future outlook disappointed investors.
So what: While China Security managed to grow its third-quarter revenue by 14% to $182 million, analysts were expecting a top-line of $201 million. Even more concerning, however, was China Security's downside guidance for 2010 and 2011, suggesting that the company's heady growth is slowing much sooner than expected.
Now what: Although this report doesn't exactly bode well for China Security's short term, it's pretty easy to find long-term value in the shares. Even when you factor in today's lowered outlook, the plunge has China Security still sitting at an extremely paltry forward P/E of five. While China Security certainly has its risks -- it competes with industrial giants General Electric (NYSE: GE ) and Honeywell (NYSE: HON ) , after all -- they seem to be baked well into the price.
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