December 19, 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 industrial manufacturer Actuant (NYSE: ATU ) fell as much as 11.5% today after reporting disappointing earnings and guidance.
So what: During the fiscal first quarter, the company saw revenue fall 4% to $377.3 million, short of the $395.7 million consensus estimate. Earnings per share of $0.49 were a penny below expectations.
To make matters worse, second-quarter guidance was for revenue of $360 million to $370 million when analysts expected $392.8 million, and earnings-per-share guidance of $0.34 to $0.38 was well below the $0.47 expectation.
Now what: The first quarter was bad, but it's the low expectations for the fiscal second quarter that has investors really worried. Management is observing a lot of uncertainty from customers and is seeing its own results slow as customers reduce inventory. I'm not a buyer today, but I think some of the weakness in earnings is short-term in nature, so I wouldn't panic sell after one bad quarter. Look for comments regarding orders next quarter for an indication of the company's strength in 2013.
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