Why Container Store Group Inc Shares Plunged

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 storage products retailer Container Store Group Inc (NYSE: TCS  )  plummeted 22% today after its quarterly results and outlook disappointed Wall Street.

So what: The stock has rallied nicely since its November IPO on high growth expectations, but the third-quarter results -- EPS of $0.11 on a revenue increase of just 7% -- coupled with downbeat sales guidance for Q4, is forcing analysts to quickly recalibrate their estimates. While the company continues to grow same-store sales and adjusted profit at a solid pace, today's results suggest that it isn't growing fast enough to justify its seemingly lofty forward P/E.

Now what: Management now sees full-year adjusted EPS of $0.40 on revenue of $754 million, versus the consensus of $0.38 and $756.2 million. "With 63 stores today, we have a long runway of growth ahead of us as we expand our store base to realize the 300+ store opportunity that we believe exists," Chairman and CEO Kip Tindell reassured investors. More important, with the stock now off more than 15% from its post-IPO highs, today's hiccup might be providing Fools with a great chance to buy into those long-term growth prospects. 

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Read/Post Comments (9) | Recommend This Article (5)

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 January 08, 2014, at 3:18 PM, tallwon2 wrote:

    "The Motley Fool has no position in any of the stocks mentioned."

    Really? This appears to be an erroneous statement.

  • Report this Comment On January 08, 2014, at 3:44 PM, mabduran wrote:

    Why did it take so long to get an updated (a bad one at that) on TCS. It has been recomended 2 months in a row, so would have expected a full analysis on what happened to this stock. Also, Motley Fool has no position in this stock? Then why I am buying it?!?!

  • Report this Comment On January 08, 2014, at 3:57 PM, jstolzman wrote:

    Was thinking about buying in last week based on MF recommendation. Good thing I waited. I guess now I need to question a purchase entirely.

  • Report this Comment On January 08, 2014, at 4:07 PM, Ray1853 wrote:

    Motley Fool lost a lot of people money today. I, like most of their subscribers, bought when they recommended it last month, and I bought more when they re-recommend it again. I sold this morning although, I should of probably held on.

  • Report this Comment On January 08, 2014, at 4:10 PM, BioBat wrote:

    Here's the good: Same store sales increased YoY beyond consensus, Revenue increased YoY, adjusted EPS beat the consensus, forward EPS beats consensus, expansion is moving ahead. Sometimes the street just gets it wrong. I think this is one of those times and is a good opportunity to buy a budding franchise.

    The recommendations are just that, recommendations. MF has never been about timing the market. They've been about recommending good companies, with promising futures so you can make a lot of money long term. They have never been about making the most in daily trading.

  • Report this Comment On January 08, 2014, at 4:57 PM, MATMAN wrote:

    I bought on the MF recommendation only a month-and-a-half ago, and after today I am still up 13%. Why are people who bought on the recommendation so upset? I guess if you just bought in the past few weeks it makes sense, but these have never been characterized as short-term recommendations.

    I had been looking to buy more TCS, and am glad for this opportunity to add to my position at a good price.

  • Report this Comment On January 08, 2014, at 5:02 PM, MATMAN wrote:

    Put in a limit order at $37.25. I'm hoping there's a little more bearishness left in the market for this company and I can steal some shares at a bargain price.

  • Report this Comment On January 08, 2014, at 6:55 PM, Lizette100 wrote:

    I put in my buy last night from my 401k so that the transaction would happen this morning. I'm risking my retirement money. So far so well with the MF recommendations. I feel that Cramer's statement "most wildly overated stock" caused this dramatic decrease. I sold before noon. Did I over react? I don't think so with comments like that from Cramer. We'll see. Punch him or hug him, lol.

  • Report this Comment On January 09, 2014, at 8:33 PM, AceOfSaves wrote:

    @tallwon2 and mabduran

    There was no error in the disclosure. Motley Fool does not own this stock...yet. MF does not have to own a stock to recommend it.

    ---------------------

    As others have said in these comments, MF recommends promising companies as investments for the long term. To those people who are blaming MF for their short-term losses, it's probably best for you to find recommendations elsewhere (and good luck finding one that gives you a 100% success rate).

    I, for one, find this stock price drop an enticing opportunity. I'm going to wait one week to make my decision.

    - AceOfSaves

    "Save more. Save often. Save now"

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12/19/2014 4:04 PM
TCS $19.02 Down -0.18 -0.94%
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