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: You might think investors would be happy to hear Wabash National (NYSE: WNC ) announce earnings of $0.05 per share yesterday, instead of the $4.64 per share it lost last year. You might think they'd be especially pleased by the earnings number considering analysts had told them to expect only $0.02 per share in profits. And that they'd be thrilled to learn from CEO Dick Giromini that Wabash just booked its biggest first-quarter gross profit margin since 2007. You might think all that … but you'd be wrong.
Instead of cheering and tickertape, investors met Wabash's news with a wave of catcalls, and a 10% drop in share price.
So what: Maybe investors were just too optimistic, and assumed Wabash would beat bigger than it actually did. After all, aside from a few outliers like YRC Worldwide (Nasdaq: YRCW ) , we've seen generally strong results from truckers Old Dominion Freight (Nasdaq: ODFL ) , JB Hunt (Nasdaq: JBHT ) , and UPS (NYSE: UPS ) these past few weeks. And Wabash does build trailers for trucking fleets. Success this past quarter may have been a conclusion foregone -- and optimism, overblown.
Now what: Now that reality has set in, what we're left with at Wabash is a company that's barely breaking even on a GAAP basis, and still burning cash like a trucker burns diesel. Until it gets its cashflow fixed, I wouldn't recommend hitching a ride.
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