September 11, 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 Polypore International (NYSE: PPO ) fell 10% in early trading after the company updated guidance, but recovered all of the loss with two hours left in the trading day.
So what: Management said that third-quarter earnings would be in the low-to-mid $0.30 range, well below analyst estimates of $0.49. Slow sales in July and August led to the shortfall, although the pace of sales has picked up in September.
Now what: The stock was already near a 52-week low, so there's a lot of bad news priced in even before today's announcement. I think that's why the stock has recovered as the day went on. Slow sales in the EV market aren't surprising anyone, and if you're a buyer of Polypore, you have to have a longer horizon than a quarter or two.
I don't see this as a good development, but I wouldn't panic over a slow quarter at this point. EVs are being adopted slowly, and if you have a long enough horizon, this is still a decent way to play this potentially large market.
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