Why Silver Spring Networks, Inc. Shares Sank

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 Silver Spring Networks, (NYSE: SSNI  ) plunged more than 23% Friday after the smart-grid systems maker reported disappointing preliminary fourth-quarter results.

So what: Quarterly adjusted sales are now expected to rise around 5% year over year to $88 million to $89 million. That should translate to adjusted earnings in the range of minus $0.01 per share to breakeven results. Meanwhile, analysts were modeling earnings of $0.18 per share on the same basis, with sales of $104.92 million.

Now what: And while CEO Scott Lang did note that the company managed to grow its total backlog to a record $875 million in 2013, good for 17% year-over-year growth, he also went on to explain, "We did not close a few expected deals which affected our fourth quarter results."

That seems fair enough, as the company's highly competitive projects don't always go as planned. But it also stands as little consolation for shareholders still reeling from Silver Spring's loss last August in a competitive bid for a 12-year, $18.5 billion contract from the U.K.'s Department of Energy. Still, the backlog proves the company has plenty of opportunities to grow.

With shares currently trading 47% below 52-week-highs, and less than a dollar above last year's IPO price at $17 per share, today's pullback could potentially prove a solid buying opportunity for patient long-term investors. At the very least, while noting significant risk still exists, I think investors would be wise to add Silver Springs to their watchlists.

Consider the nine solid stocks in this free report
If Silver Springs Networks is still too risky for your investing taste, you're in luck!

One of the dirty secrets that few finance professionals will openly admit is the fact that dividend stocks, as a group, handily outperform their non-dividend paying brethren. The reasons for this are too numerous to list here, but you can rest assured that it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.


Read/Post Comments (0) | Recommend This Article (2)

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.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2799999, ~/Articles/ArticleHandler.aspx, 11/23/2014 2:04:09 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement