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 rare earth miner Molycorp (NYSE: MCP) are up 33% today after reporting better-than-expected earnings.
So what: First quarter revenue was up 9% sequentially, to $146.4 million, ahead of the $135.6 million estimate. On the bottom line, net loss was $47.2 million, or $0.33 per share, but when you adjust for one-time items, the loss was just $0.15 per share versus the $0.31 estimate.
Now what: Beating earnings estimates is always good, but let's not forget that Molycorp is still losing money hand over fist. Management said that customers are beginning to buy in more normal patterns again as stockpiles fall, but we haven't seen an increase in rare earth prices, which would really help earnings. I'm not as bearish as I was a year ago on Molycorp, but I want to see this promise of positive earnings play out before buying the stock. When the company floods the market with another expansion of production, I'm afraid it will cause prices to plunge again, and we'll be facing losses again next year.
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