December 12, 2012
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 seismic data-processing equipment specialist Geospace Technologies (NASDAQ: GEOS ) sank as low as 12% today after its quarterly results missed Wall Street expectations.
So what: The stock has been on fire over the past year on a string of better-than-expected results, but the wide fourth-quarter miss -- EPS of $0.33 on revenue of $36.9 million versus the consensus of $0.64 and $47.1 million -- is triggering concerns over slowing growth going forward. Management blamed erratic order flow and timing of shipments for the miss, however, giving Geospace bulls reason to believe that it's just a short-term hiccup.
Now what: I'd look into this pullback as a possible buy-in opportunity. "We ended fiscal year 2012 with $146 million of working capital, $71 million of cash/short-term investments, and no long-term debt on our balance sheet," said Chairman and CEO Gary Owens. "We believe the strength of our balance sheet puts us in a good position to meet the challenges ahead." When you couple that rock-solid financial position with the stock's still-reasonable forward P/E of 12, Geospace might have plenty of more room to run.
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