CSG Systems Shares Plunged: What You Need to Know

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 CSG Systems (Nasdaq: CSGS  ) slumped nearly 17% in early trading and remain down more than 8% as of this writing after badly missing second quarter estimates.

So what: Revenue rose 38% to $181.3 million, though adjusted profit fell 8% to $0.49 a share. Analysts were hoping for EPS of $0.55 on $186.5 million in revenue, according to data compiled by Yahoo! Finance.

Now what: Management blamed the earnings side of the miss on a higher-than-expected tax rate, but the feds only accounted for $0.03 of CSG's $0.06 miss. CEO Peter Kalan also said CSG is undergoing a "transformation" that could prove bumpy over the near team. Are you willing to pay 8 times forward earnings to enjoy the fruits of a potential turnaround? Weigh in using the comments box below.

Interested in more info on CSG Systems?Add it to your watchlist.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

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  • Report this Comment On August 04, 2011, at 10:21 AM, Ajaxkid wrote:

    Missed earnings on higher than expected taxes is bologna. That is today's corporate excuse for several companies. CSGS contracts are partially based upon the number of subscribers and the number of transactions from its largest clients. Unless Comcast, Time Warner, Charter can increase their subscriber base, CSGS will become less profitable. If this trend persists, and I am sure it will, there four largest clients will not renew the same type of billing contracts when they expire.

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