April 27, 2012
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 TPC Group (Nasdaq: TPCG ) fell 14% today after the chemical product company released earnings.
So what: Revenue grew 9% to $606 million in the quarter and earnings per share rose from $0.70 to $1.14, easily topping estimates. The market may be looking at a 16% decline in volume as a negative in the earnings report. This decline was offset by a 29% increase in average unit selling price, which accounted for the increase in earnings.
Now what: Feedstock restrictions, which were responsible for the volume decline, are expected to continue due to planned ethylene plant outages. On the positive side, the company has been able to pass high costs on to customers and hasn't seen a decline in the business due to a reduction in feedstock. I think the sell-off today is overdone and that this is an attractive stock, trading at just 10 times forward earnings estimates.
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