Why GT Advanced Technologies' Shares Plunged

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 GT Advanced Technologies (Nasdaq: GTAT  ) experienced a power outage today and fell 11% after the company reported earnings.

So what: Revenue rose 30% to $353.9 million and the company reported a profit of $79.1 million, or $0.69 per share, but it wasn't enough. Analysts had expected revenue to be $393.5 million and earnings per share of $0.71.

Now what: Guidance of $1.30 to $1.40 in earnings also fell below estimates, but let's take a step back here. Despite the incredible oversupply of solar products in the market GT is still making a profit and shares are now trading at an absolutely ridiculous 3.4 times earnings at the top end of guidance. Also consider that the company had $350.9 million in cash and $75 million in debt to end the quarter. This is a screaming buy in my eyes.

Interested in more info on GT Advanced Technologies? Add it to your Watchlist.

Fool contributor Travis Hoium has no position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw.

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Read/Post Comments (4) | Recommend This Article (8)

Comments from our Foolish Readers

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  • Report this Comment On May 17, 2012, at 4:04 PM, millsbob wrote:

    Travis, you don't think the tariff decision has anything to do with it?

  • Report this Comment On May 17, 2012, at 4:04 PM, bigbigdeal3 wrote:

    I bought it last week when it was 6.38. I hope you're right.

  • Report this Comment On May 17, 2012, at 6:48 PM, csqrd wrote:

    I would be very interested to hear from some of you who are selling at these prices. Why?

    I can guess why there are buyers; for the same reasons Travis mentions plus the fact that GTAT management continues to diversify their product offerings and they have the cash to do so, I have been buying for the last few months. My only regret is that I didn't know the stock was going to be on clearance table sale. I wish I had kept a little more cash available. But that's probably really greedy.

    Two years from now, with an almost assured multi-bagger in hand, I think this one will look brilliant.

  • Report this Comment On May 17, 2012, at 7:38 PM, djknow wrote:

    I bought more in the morning and then doubled up in the afternoon. You get what you pay for and in this case I believe I got 3-4 of what I paid for.

    This a well funded healthy small cap with great margins and diversified market segments able to earn nice profits. Way to go GT and thank you short guys for giving me one of my favorites for a song. Can't wait until the squeeze.

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