Why II-VI Shares Plunged

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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 laser and optics manufacturer II-VI (NASDAQ: IIVI  ) dipped as much as 10% after reporting second-quarter results that widely missed Wall Street's expectations.

So what: For the quarter, II-VI reported a 1% decline in revenue to $125.9 million, as domestic revenue gains of 3% were offset by international slowness, which caused a 3% decline in revenue. Net income for the quarter fell 8% to $0.19. Wall Street had been expecting II-VI to report a profit of $0.21 on revenue of $138.1 million. Furthermore, II-VI's third-quarter forecast, while perfectly within analysts' EPS range, fell short of the expected revenue forecast by $6 million to $11 million.

Now what: The key point here is that II-VI gets about 60% of its sales overseas, and the market for optical products overseas appears worse than within the United States. What small gains will be netted domestically from a boost in telecom spending will be more than cancelled out by weakness overseas. This marks the fourth straight quarter that II-VI has fallen short of estimates and is more than enough reason to avoid the company for the time being.

Craving more input? Start by adding II-VI to your free and personalized Watchlist so you can keep up on the latest news with the company.

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Related Tickers

9/28/2016 4:00 PM
IIVI $23.51 Up +0.05 +0.21%
II-VI CAPS Rating: *****