Why Actuant's Shares Dropped

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.

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


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