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 composite decking company Trex (TREX 0.23%) dropped 13% today after reporting earnings.
So what: Second-quarter revenue rose 5% to $98.6 million but analysts were expecting $103.3 million. The bottom line was even worse when the company reported earnings of $0.86 per share, below the $1.00 consensus estimate.
Now what: Investors were also disappointed by revenue guidance of $72 million for the third quarter, which also fell below estimates of $78.3 million. Shares were trading at 18 times forward earnings and that's before analysts adjust estimates lower based on guidance. That's not a good value for a company barely growing revenue, and it will keep me away from the stock today.
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