Central European Distribution Shares Plunged: What You Need to Know (CEDC, MCO)

Central European Distribution Shares Plunged: What You Need to Know

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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 vodka giant Central European Distribution (Nasdaq: CEDC ) stumbled down as much as 12% in intraday trading on heavier-than-average volume.

So what: CED shareholders probably feel like they need a drink after the week they've had, and I can't blame them. Earlier in the week, Mr. Market took a hatchet to the stock after the company badly missed fourth-quarter earnings estimates and gave a weak outlook for 2011. Today, Moody's (NYSE: MCO ) placed the company under review for a possible downgrade. In addition, both Credit Suisse and Nomura downgraded the stock, Credit Suisse from "outperform" to "underperform" and Nomura from "buy" to "neutral."

Now what: The stock's massive drop this week -- it's down 45% from where it closed last Friday -- is an eye-catcher for value investors (like me) that often like to zero in on beaten-down stocks. But while the stock could be worth a closer look, the debt issues are very concerning as the company's deteriorating results leave it a very slim cushion against real trouble.

Want to keep up to date on Central European Distribution? Add it to your watchlist.

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Moody's is a Motley Fool Stock Advisor recommendation. The Fool owns shares of Moody's. 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.

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