Why SS&C's Shares Dropped

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: Share's of investment and financial software provider SS&C Technologies (Nasdaq: SSNC ) fell nearly 10% this morning, but have since "recovered" to a 7% loss. The company's lowered guidance more than offset the goodwill its strong quarterly results might have generated.

So what: Today's results were $120.9 million in revenue and $0.33 in EPS, which were in line with expectations and a $0.01 beat, respectively. But that's not the big problem today. The top range of SS&C's full-year earnings estimate was sliced by $3 million. The new range is now $112.7 million-$115 million, down from $113 million-$118 million as estimated in June.

Now what: Companies have been downgrading their guidance throughout the quarter, a bad sign that the market might be about to fall on its face. But there's nothing hugely dangerous about such a small slice off the top, and SS&C's guidance for the third quarter shows growth on both top and bottom lines from the current quarter. SS&C isn't that cheap at its current valuation, and remains near yearly highs after this drop.

Sentiment could push the stock in either direction, but the relatively rapid recovery from today's lows indicates that the market thinks there could be more upside than downside ahead for SS&C.

Want more news and updates? Add SS&C to your Watchlist now.

More Expert Advice from The Motley Fool

The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.

Jeff Fischer and team have demystified options. And they can rack up income like $1,030... $2,626... and $3,228 on a schedule you can set your watch by!
That's why we're glad to announce every single one of their closely guarded strategies is available to YOU during May and June – 100% FREE, no strings attached! Just enter your email address in the box below...

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more news and insights. 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.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment icon found on every comment.