Why Exponent’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 technical consultant Exponent (NASDAQ: EXPO  ) fell as much as 13% today, after the company released earnings.

So what: Revenue rose 7%, to $65.0 million, and net income increased 10%, to $8.5 million, or $0.60 per share. But analysts expected $0.63 per share and, after beating expectations by a pretty wide margin in the previous three quarters, the earnings miss was pretty disappointing.  

Now what: This is really just a pullback from a high valuation and overinflated expectations. The company is still growing both top and bottom line results, so there's nothing investors should be panic about. I'd like to get a better value than 19 times trailing earnings considering the single-digit growth rate, so if shares fall further, there could be a nice entry point for investors.

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


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  • Report this Comment On February 01, 2013, at 8:12 AM, stillwater9999 wrote:

    If you consider the $113 MM cash on the balance sheet the effective p/e is significantly lower.

  • Report this Comment On November 14, 2013, at 4:50 PM, Mivali wrote:

    Ten months later it was up 63%. Holding proved to be a good strategy. Waiting for it to fall a little more before getting into it might have been the best advice at the time too.

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