Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Why OSI Systems’ Shares Cratered

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 OSI Systems (NASDAQ: OSIS  ) are down about 14% today after its earnings report offered underwhelming forward guidance. The company, known for its airport screening systems, narrowly bested analysts' bottom-line estimates, but the rest of its report was thoroughly underwhelming.

So what: OSI reported revenue of $194 million and net income of $12.4 million for its fiscal second quarter, both of which represented minor upticks from the year-ago quarter. Adjusted earnings per share of $0.70 came in two cents ahead of the consensus, but analysts were looking for $211 million in revenues, so this was a pretty rough miss on the top line.

OSI's forward guidance range is fairly broad for full-year EPS, coming in at $2.77-$3.00 per share against a consensus estimate of $2.86. The top line was again problematic here, as the full-year $850 million-$875 million range came in below the $876.5 million consensus.

Now what: OSI CEO Deepak Chopra (no relation to the famous doctor of the same name) pointed to Mexican screening initiatives and growth in the optoelectronics and manufacturing division as sources of strength. The company's backlog is also up significantly, to $1 billion from $400 million a year ago. On the other hand, the TSA recently pulled out of its arrangement with OSI subsidiary Rapiscan for backscatter scanner installations, the so-called "naked body scanners" that have become quite controversial. This is OSI's second major drop in recent months, but the company's P/E remains a bit high at 26.7. It's a lot cheaper than it once was, but OSI isn't a screaming buy. I'd keep my eye on it for any further drops, which might push it into buy territory.

Want more news and updates? Add OSI to your Watchlist now.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2213859, ~/Articles/ArticleHandler.aspx, 9/30/2016 8:04:53 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 10 hours ago Sponsored by:
DOW 18,143.45 -195.79 -1.07%
S&P 500 2,151.13 -20.24 -0.93%
NASD 5,269.15 -49.39 -0.93%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/29/2016 4:00 PM
OSIS $64.49 Down -0.27 -0.42%
OSI Systems CAPS Rating: ****