Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Why China Automotive Shares Tumbled

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 China Automotive Systems (NASDAQ: CAAS  ) were slipping today, down as much as 25% after a disappointing earnings report.

So what: Sales for the automotive supplier increased 21.8% to $97.9 million, but that was well short of expectations at $102.7 million. Earnings per share, meanwhile, came in at $0.18, matching expectations. CEO Qizhou Wu noted that the company grew its market share during the quarter as vehicle sales in China only increased by 12.3%. Despite the growth in revenue, earnings per share actually fell from $0.21 a year ago due to a lower gross margin on a change in the product mix, and increases in selling and R&D expenses.

Now what: Even with the poor sales growth and the drop in the share price, management raised its full-year revenue growth guidance to 15%, or $387 million, though that is below analyst estimates of $407 million. Still, China Automotive's shares have been all over the place in the past year, and with recent economic indicators from China looking up, I wouldn't count out the auto supplier despite the underwhelming sales growth.  A P/E of 8.4 doesn't hurt either; profits should begin to grow again as long as sales are increasing.

China still remains the world's largest auto market, and it's growing fast. Even though China Automotive may have tripped up, there are still plenty of smart picks that will give you exposure to this trend. Our analysts have identified two automakers that are poised to surge along with China's middle class. If you want to be among the investors who get rich from this growing phenomenon, then just click here now for more information.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2595455, ~/Articles/ArticleHandler.aspx, 10/1/2016 9:59:12 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 12 hours ago Sponsored by:
DOW 18,308.15 164.70 0.91%
S&P 500 2,168.27 17.14 0.80%
NASD 5,312.00 42.85 0.81%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/30/2016 4:00 PM
CAAS $4.15 Up +0.01 +0.24%
China Automotive S… CAPS Rating: **