Why Consolidated Water Co. Ltd Shares Took a Spill

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 Consolidated Water Co. Ltd (NASDAQ: CWCO  ) were in the toilet today, falling as much as 21% after coming up short in its earnings report.

So what: The Caribbean water supplier missed on both top and bottom lines, delivering earnings per share of $0.06, short of estimates at $0.08, while revenue fell 2.5%, to $15.4 million, below the consensus at $16 million. Higher-than-normal rainfall at its home island on the Caymans seemed to be the culprit, as that dampened demand for its water. Sales in its retail division, the one affected by the rainfall, fell 12%, while bulk water sales, the majority of its business, increased 2%.

Now what: Considering that the retail sales were affected by a one-time event, and the company's performance was otherwise respectable, I wouldn't get too excited about today's share drop. The summer quarter is the slowest for Consolidated, and shares had doubled in the past year before today's drop as the company had crushed earnings estimates in its three previous reports. With little growth expected ahead, shares may be fairly valued now; but there's no reason to change your investing thesis based on today's news.

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