Why Shares of Armstrong World Industries, Inc. Dropped Today

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 building product provider of Armstrong World Industries, (NYSE: AWI  ) fell 10% today after the company reported earnings.

So what: Revenue was up 7.9% from a year ago to $661.3 million and net income rose 17.4% to $10.8 million, or $0.20 per share. Revenue was ahead of expectations, but adjusted earnings of $0.32 per share (after pulling out one-time items) were still $0.08 below estimates.

Now what: Investors also weren't thrilled with 2014 guidance for earnings of $2.55-$2.80 per share, although that's a big jump from $2.04 per share in 2013. Expectations look to have just gotten ahead of themselves; with continued growth, I think Armstrong is in good shape. Shares trade at just 19 times the top end of 2014 estimates, which isn't cheap but is a reasonable price for a company in a growing space in the construction industry.

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