Why Raven Industries' Shares Dropped

By Travis Hoium – Nov 20, 2012 at 4:13PM

NASDAQ: RAVN

Raven Industries

Is this meaningful or just another movement?

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 manufacturer Raven Industries (RAVN) fell as much as 10% today after reporting earnings.

So what: The company reported a 4% increase in sales to $97 million and a slight decline in profit to $10.9 million, or $0.30 per share. Analysts had expected revenue of $101.7 million and earnings of $0.34 per share.

Now what: The earnings report was pretty ho-hum, and when you aren't showing signs of solid growth on the top and bottom lines investors begin to get impatient. Shares are trading at 17 times trailing earnings, a price that's too steep for a no-growth company. I'm not a buyer today but if shares continue to fall they may be attractive as a play on future economic improvement.

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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 TMFFlushDraw.

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