China Digital TV's Shares Dropped: What You Need to Know (STV)

China Digital TV's Shares Dropped: 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 digital smart card manufacturer China Digital TV (NYSE: STV ) got a screen full of static today, falling as much as 17.2% on heavy trading.

So what: Last night's third-quarter report showed 22% year-over-year sales growth and flat earnings, but Street estimates had pointed to slightly higher earnings. Share prices have fallen more than 50% over the last year, even though this was the first bottom-line miss since 2009.

Now what: CEO Jianhua Zhu called this "another solid quarter" with "robust demand" and strong overall growth in the Chinese digital TV industry. Fellow Fool Rick Munarriz calls the company "a thinking investor's play on China's growing middle class," and I agree. There's nothing wrong with the business, and this Rule Breaker only becomes a better value as share prices fall for no sensible reason.

Interested in more info about China Digital TV? Click here to add it to My Watchlist.

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Fool contributor Anders Bylund holds no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of China Digital TV. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.

Comments from our Foolish Readers

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Report this Comment On November 29, 2011, at 7:48 AM, Sadalmelik wrote:

By my count, this company has $3.05 in cash money for each share. It has very little debt. It has great prospects for continued growth over the next two-three years as China goes digital. It has a brief history of paying some fat dividends, but not on a regular basis.
So, why has the stock price dropped 50% since I bought it? It seems to have all the hallmarks of a winner, and I am baffled by its continued plummet. It is because it is Chinese? Are the financial reports, although audited, somehow suspect anyway?
I've recouped some of the losses through the dividends paid, and I haven't risked a lot anyway, but I wish I knew if I should cut my losses or double down while it is incredibly low priced.