Why A.M. Castle's Shares Plunged Today

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: Metals and plastics distributor A.M. Castle (NYSE: CAS  ) dropped 10% today after predicting a third-quarter loss.

So what: Revenue is expected to be between $250 million and $255 million for the quarter, well below the $278.3 million analysts expected. On the bottom line, analysts were expecting a $0.07 per share loss, but the company will lose between $0.28 and $0.32 per share. 

Now what: Full results are due out on Tuesday, October 29, but companies that are going to miss by a wide margin often warn investors ahead of time. Considering the weakness this quarter, and a loss that will presumably be higher than the $0.46 per share analysts are now expecting I think there's an uphill climb for the company. Investors were expecting strong revenue growth next year to reach profitability, and I don't see that happening; so until operations turn around, I see this stock as too high risk to touch.

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