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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Brian Pacampara

I take a look at big 10% moves, as well as stock-shaking analyst calls, on a daily basis for The Fool. While I don't believe in active trading, closely monitoring Mr. Market's mood swings can help identify long-term opportunities.

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