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 electronic payment company VeriFone Systems (NYSE: PAY ) plummeted 38% today after its first- and second-quarter outlook easily missed Wall Street expectations.
So what: VeriFone's preliminary first-quarter results -- EPS $0.47-$0.50 versus its prior view of $0.73 -- and downbeat second-quarter guidance are forcing analysts to drastically recalibrate their growth estimates. While management blamed the gloomy outlook largely on the economic weakness in Europe, investors are worried that such a wide miss suggests far more serious internal and competitive challenges.
Now what: Management now sees second-quarter EPS of $0.45-$0.50 on revenue of $435 million-$450 million, well below Wall Street's view of $0.80 and $517 million. "While we are disappointed with our performance and execution, we have a firm grasp on the challenges we faced and are taking aggressive steps to strengthen our competitiveness over the long-term," said CEO Douglas Bergeron. "We are confident in our ability and committed to executing against our strategic priorities to drive shareholder value." With the stock now off a whopping 65% from its 52-week high and trading at a forward P/E of 5, betting on that turnaround talk might even be worth looking into.
Interested in more info VeriFone? Add it to your watchlist.
2013 and beyond
The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.