Why InnerWorkings' 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 marketing supply chain company InnerWorkings (NASDAQ: INWK  ) fell as much as 12% in early trading, after the company released earnings.

So what: Fourth quarter revenue was up 19%, to $208.0 million, and net income fell slightly, to $5.8 million, or $0.12 per share. On an adjusted basis, earnings per share were $0.15, which was about in-line with estimate.  

Now what: The challenge in early trading is that revenue was short of estimates, and someone obviously took the opportunity to sell a block of shares. But the stock recovered to about a 2.3% loss late in trading, because the earnings report wasn't a complete disaster. Shares now trade at 22 times next year's earnings estimates, a steep price for a company with flat earnings, so unless the stock dips, I think I'll stay away from this investment for today.

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


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