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 GulfMark Offshore (GLF) fell as much as 12% today after the company reported third-quarter earnings.
So what: Revenue rose 19.6% in the quarter, to $121.8 million, and net income nearly tripled, to $32.3 million, or $1.23 per share. Excluding a one-time gain, the company earned $1.00 per share, which was $0.03 ahead of estimates.
The problem today is that third-quarter revenue was below estimates, and fourth-quarter guidance of $120-$125 million in revenue is below estimates of $128.3 million from Wall Street.
Now what: This is a typical case of expectations just getting ahead of operations. Both GulfMark's own operations, as well as the offshore drilling industry as a whole, are improving, so there aren't any fundamental cracks in the business model. I think this dip presents a buying opportunity for investors because earnings are still strong, and the forward P/E ratio of the stock is just 11, a solid price considering the company's growth.
