Why Shares of IPG Photonics Crashed Today

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 high-tech manufacturer IPG Photonics (Nasdaq: IPGP  ) fell 12%, after delivering a disappointing earnings report.

So what: Third quarter revenue rose 21% to $156.4 million and earnings per share were $0.81, both ahead of estimates. But guidance often trumps the previous quarter, and IPG doesn't seem to think the fourth quarter will be as good as analysts do. In the quarter, the company sees revenue of $140 million to $150 million, and earnings of $0.65 to $0.75 per share. Analysts had expected revenue of $155.7 million, and earnings of $0.81 per share.

Now what: The guidance miss was more than enough to knock down shares today. But, before you throw out the stock for the guidance numbers, remember that operations continue to improve, even if management sees a tough fourth quarter due to the macro environment. Shares are now trading at 16 times forward earnings estimates and, if shares fall a little further, the stock could be a great value for the long-term investor.

Interested in more info on IPG Photonics? Add it to your watchlist by clicking here.

Fool contributor Travis Hoium has no positions in the stocks mentioned above. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDrawThe Motley Fool owns shares of IPG Photonics. Motley Fool newsletter services recommend IPG Photonics. 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.


Read/Post Comments (2) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 31, 2012, at 9:15 PM, csqrd wrote:

    For those traders who dumped their shares today, and those long term investors who had both the spare coins and the smarts to scoop them up, your decisions are already made. For the less decisive, it might be worth paying attention to the 8.9% increase in shareholder equity from last quarter. This matches the 40.5% equity CAGR over the last three years. Between the increase in equity and the price drop today, the cost of a $ of equity in IPGP went from $4.69 to $3.80. Will a "less than expected" quarter derail this growth? Sounds like a buying rather than a selling opportunity. I only wish I had more cash.

  • Report this Comment On November 01, 2012, at 1:23 PM, donny62832 wrote:

    unfortunately, if the company thinks they are going to have that tough of a quarter, then the analysts are most likely all going to start lowering their numbers, which is going to cause the stock to drop and drop over the next 3 months as all these analysts take their turns at lowering guidance. This should create a great entry price in a couple months, but getting in now is probably a little early and you will probably suffer the next couple months.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2087676, ~/Articles/ArticleHandler.aspx, 10/1/2014 6:19:54 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement