BroadSoft 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: BroadSoft (Nasdaq: BSFT  ) dropped 19% in intraday trading today after being broadsided by fears of a slowing economy (and demand) and risky assets.

So what: Even with today's sell-off the stock trades at a rich 39 times non-GAAP P/E ratio and 51 times GAAP P/E ratio. That's hard to justify in any economy. Analyst forecasts that EPS will grow only 14% in the coming year make the valuation even tougher to justify.

Now what: With fears of an economic slowdown ruling the stock market, including some companies saying that communications demand is disappointing, who can blame investors for seeking shelter from stock in a company focused on the communications industry? BroadSoft is slated to report earnings on Monday. Investors fearing more disappointing news from technology and communications companies may be looking to get out ahead of BroadSoft's earnings release.

Interested in more info on BSFT? Add it to your watchlist by clicking here.

Fool contributor Cindy Johnson does not own shares of any company named above. 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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10/25/2016 4:00 PM
BSFT $45.83 Down -0.78 -1.66%
BroadSoft CAPS Rating: *