Why Fuel Systems Solutions Shares Slumped

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 Fuel Systems Solutions (NASDAQ: FSYS  ) were getting gummed up today, finishing down 18% after reporting third-quarter earnings.

So what: The maker of alternative fuel components said revenue increased 8.9% to $97.6 million and earnings per share came in at $0.05. Both numbers matched estimates. What seemed to drive investors away was disappointing guidance. Management narrowed its full-year revenue outlook to the lower end of its previous range at $400 million-$420 million, while the consensus stood at $416 million as the company noted a slower global transportation market.

Now what: The drop in its revenue outlook doesn't seem like enough of a reason to prompt such a sell-off in shares, but alternative fuel providers have struggled of late. With little or no profit recently, Fuel Systems needs a breakthrough and lower sales won't do it. Expect analysts to drop their $0.16 EPS projection for the current quarter soon. Until the fog lifts from the alternative industry, I'd stay away.

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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.

  • Report this Comment On November 07, 2013, at 7:32 PM, expoiltthespread wrote:

    the title actually says the shares jumped....they did just the opposite-they crashed. Sales guidance really didn't even come down that much, it simply fell to the bottom of its previous range. They lose $15 million in annual sales at the most , yet the shares drop $60 million in market cap? This is insanity- 25% of the stock's market cap is made up of cash, and it sells at below book value. This one should be a takeover target.

  • Report this Comment On November 08, 2013, at 12:29 PM, jgirdis wrote:

    This stock has been a disappointment. I made money on a previous trade but behind on this round. They seem to be doing the right stuff but the stock is down over 50%.

  • Report this Comment On November 08, 2013, at 12:43 PM, Pokerchip wrote:

    Either you are showing your investing inexperience or you purposely used the words "shares jumped" in your title to get people to read your worthless analysis when shares actually "fell", "broke", "gapped down", "retrenched", "spiraled down", "sold off", "tanked", "blew through support", or simply crashed liked the previous poster stated.

    Either way, it is detrimental to the investment community.

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