Why Core Laboratories' 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 Core Laboratories (NYSE: CLB  ) fell 17% today after the company reduced third-quarter earnings guidance.

So what: Management now expects third-quarter revenue to be between $240 million an $245 million and earnings per share of $1.09 to $1.13. The reduction is due to a decline in U.S. and Canadian on land rig counts.

Now what: Management had assumed a flat rig count in its previous projections, so it's no surprise that expectations are down. The reduction in revenue guidance was only $10 million in the bottom end and $0.08 per share, so I don't think this is the end of the world. I'm not a buyer on the dip today, but if shares continue to slide another 10% or so, the current 23 P/E ratio will begin to look better -- and when drilling picks up again, so will the stock.

Interested in more info on Core Labs? 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.

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