January 30, 2013
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 Hub Group (NASDAQ: HUBG ) dropped as much as 11% in early trading today, after releasing earnings and being downgraded by an analyst.
So what: During the fourth quarter, the company reported a 5% increase in revenue, to $801 million, and a $0.05 jump in earnings, to $0.51 per share. The bottom line beat estimates by a penny, but top-line growth was disappointing compared to what Wall Street expected. As a result, Stifel Nicolaus came out and downgraded the stock today from a buy rating to hold.
Now what: It was a strange day for those who watch Hub Group. Shares traded down sharply in the opening minutes of trading, as a few large orders cleared the market. But shares soon recovered, and climbed most of the day to near a flat finish. I think that's appropriate given earnings results were mixed, and the fact that we don't take analyst downgrades too seriously at The Motley Fool. I don't think there should be a big change in your investment thesis today, but I would keep an eye on the revenue line going forward, because that's what the company needs to improve if it's going to live up to its 21 P/E ratio.
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