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Why H.B. Fuller's 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 specialty chemicals maker H.B. Fuller (NYSE: FUL  ) fell as much as 10% today after the company released earnings and guidance.

So what: Third-quarter revenue was up 38% to $500.5 million but fell short of estimates. Net income was $24.6 million, or $0.48 per share; on an adjusted basis, earnings of $0.53 per share met expectations.

But full-year-revenue guidance was lowered to $1.88 billion from $1.90 billion, which scared investors.

Now what: The somewhat ironic point is that analysts had only expected $1.88 billion in full-year earnings before the announcement, so estimates were already accounting for the lowered guidance. I wouldn't be too concerned because organic revenue increased 5% this quarter with volume and prices moving higher. The stock is trading at 11.5 times forward earnings estimates so, with that level of growth, the stock is a good value and I think long-term investors should view this as a buying opportunity.

Interested in more info on HB Fuller? Add it to your watchlist by clicking here.

Fool contributor Travis Hoium does not have a 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.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Related Tickers

10/24/2016 4:02 PM
FUL $43.91 Up +0.11 +0.25%
H.B. Fuller CAPS Rating: *****