Why Aceto Corporation's Shares Dropped Today

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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 pharmaceutical distributor Aceto Corporation (NASDAQ: ACET  ) fell 13% today after the company reported earnings.

So what: Fiscal second-quarter sales were up 2.2%, to $116.5 million, and net income was up nearly 50%, to $6.8 million, or $0.24 per share. Revenue was $2.7 million below estimates, but early media reports from Thomson Reuters and others said the company missed by $30.5 million, which exaggerated the issue. 

Now what: Results were largely in-line with estimates, and even though reporting was misrepresented, I think the issues will pass quickly. There's really nothing alarming here, and investors looking to get in should see this as a buying opportunity. Shares now trade at just 14.7 times 2014 estimates and, considering the fact that Aceto has beaten estimates two of the last four quarters and is growing the bottom line quickly, I think the stock could be in for a nice run.

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Travis Hoium

Travis Hoium has been writing for since July 2010 and covers the solar industry, renewable energy, and gaming stocks among other things.

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Related Tickers

8/28/2015 3:59 PM
ACET $22.76 Up +0.17 +0.75%
Aceto Corp CAPS Rating: ****