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 Benchmark Electronics (BHE -1.34%) briefly fell by as much as 14% when the market opened today, but have been recovering throughout the day to bring total losses up just under 5%. The market was spooked by guidance that came in below analyst expectations, but seems to have come to terms with the company's projected weakness for now.
So what: Benchmark's $0.31 in EPS was a penny better than the consensus estimate, and its revenue hit the consensus essentially on the nose. However, fourth-quarter guidance now anticipates EPS in the range of $0.26 to $0.31, which is significantly lower than analysts' $0.34 EPS estimate on the low end. Analysts at Raymond James downgraded Benchmark to underperform as a result of that weakness.
Now what: Benchmark's third quarter was weaker than its second quarter in terms of revenue, and non-GAAP earnings were essentially flat. The company's strong year-ago quarter -- although its higher non-GAAP net income was boosted by a one-time tax benefit -- also highlights the company's relative lack of forward progress. With the fourth quarter again expected to be flat, this doesn't seem like a stock with the wind in its sails, and its P/E is still rather high for a company with stalled momentum. I'd stay on the sidelines for now.
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