September 20, 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 filter manufacturer CLARCOR (NYSE: CLC ) fell as much as 11.5% earlier in the trading session, after reporting disappointing third-quarter earnings results.
So what: For the quarter, CLARCOR reported just a 0.7% increase in sales to $286.7 million, and a 6% drop in net income, to $0.60, from the year-ago quarter. Wall Street had been looking for CLARCOR to report a profit of $0.69 on sales of $298.9 million. CLARCOR noted strength in its industrial and environmental filtration business, but that was more than countered by weakness in heavy-duty engine filter aftermarket sales domestically and in China, as well as by unfavorable currency translations abroad. In accordance with this weakness, CLARCOR lowered its full-year EPS forecast to a range of $2.35 to $2.45 from its own previous forecast of $2.50 to $2.65. The Street had been expecting $2.58.
Now what: Today’s results really shouldn’t be all that surprising if you’ve been following CLARCOR for some time. Over the past five quarters, CLARCOR has missed Wall Street’s consensus EPS estimates in four of them. Growth rates are slowing in China, and heavy-duty filter growth in the U.S. is looking tepid, at best. For now, it’s a company I’m happy to just watch from the sidelines.
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