Why ACCO Brands Shares Sank

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 office supplier ACCO Brands (NYSE: ACCO  ) were giving investors paper cuts today, falling as much as 16% after the company cut its full-year guidance.

So what: Adjusted earnings of $0.26 per share actually beat estimates of $0.20, and revenue rose 33% to $438.7 million, boosted by the company's acquisition of MeadWestvaco, but fell far short of estimates of $468.3 million. Sales at its international division declined 7% as the company cut production of low-margin products to Europe and Australia. The company, which makes the iconic Trapper Keeper, cut its annual guidance from $1.06 per share all the way down to $0.82-$0.85, though it did predict a $0.20 EPS gain in 2013. Management blamed softening in Europe for two-thirds of the reduction.

Now what: This seems like run-of-the-mill cyclical weakness based on currency exchange rates and slower demand. While no investor likes to see sales projections down 8%, it's worth giving the company a chance to redeem its acquisition and take advantage of the cost synergies it's promised. With shares down more than 40% over the last four months, ACCO's forward P/E sits at just 6.6. Shareholders who haven't bailed yet should be better off waiting for a rebound.

Want to stay on top of ACCO? Just add ACCO Brands to your watchlist.

Fool contributor Jeremy Bowman holds no positions in the companies in this article. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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