Why Oil-Dri Corporation of America's Shares Dropped

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 absorbent material maker Oil-Dri Corporation of America (NYSE: ODC  ) dropped 14% today after the company released earnings.

So what: Fiscal first quarter 2014 earnings are out and net sales were up 3% to $63.5 million and net income fell 36% to $2.9 million, or $0.41 per share. Higher manufacturing costs as well as increased marketing spending resulted in the weaker bottom line.  

Now what: Management even said it was disappointed in the results and investors sold off as well. The biggest concern I have is that higher manufacturing costs don't appear to be a short-term challenge because natural gas prices and packaging costs will likely continue to rise. I don't think there's a reason to buy today and would like to see more growth and margins improving before jumping in.

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