Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Why Shares of Amira Nature Foods Ltd Dropped, but Shouldn't Have

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 Amira Nature Foods Ltd  (NYSE: ANFI  ) were looking unhealthy today, falling as much as 22% after reporting third-quarter earnings this morning. 

So what: The specialty-rice maker came up short on the bottom line, posting per-share earnings of $0.22, up from $0.17 a year ago but below estimates of $0.28. Meanwhile, revenue breezed past expectations, climbing 25.1% to $142.5 million, well ahead of the consensus at $126.5 million. Management cited higher raw material costs for the disappointing profit growth as cost of material rose from 73.5% to 75.4%, or an additional expense of about $2.7 million. Had cost of material remained the same, Amira would have reported an EPS of $0.30. 

Now what: Given the above calculation, investors seem to be burying the lede, here. Amira stock had been bid up substantially in the past few months on little news, which may explain today's sell-off, but the market seems (small-f) foolish to overlook the strong revenue growth, focusing on food costs instead, which are highly volatile and out of Amira's control. The company also raised its revenue for the full year to $507 million-$517 million, slightly ahead of estimates at $508 million, but below fourth-quarter estimates. Still, I'd expect the stock to bounce back as the company continues to expand its product line and geographic footprint. 

More great growth stocks
Even after today's fall, Amira shares have more than tripled in the past year. If you're looking for more great growth stocks like Amira, then take a page from our growth guru David Gardner's playbook. He's found stocks with returns like 926%, 2,239%, and 4,371%, and recently, and he's ready to do it again. You can uncover his scientific approach to crushing the market and his six carefully chosen picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Read/Post Comments (1) | Recommend This Article (4)

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 February 25, 2014, at 5:05 PM, HowieMan1 wrote:

    Jeremy- You need to look a little further below the surface on this one. How does ANFI manage to generate higher margins (22% GMs) than its peers (KRBL, LT Foods, REI Agro) despite only 1/3 of sales being Amira branded (vs 90-100% branded for peers) and externally processing 80% of its rice? Note these margins have also remarkably been achieved as raw rice costs have been rising 25-35%.

    Here are a couple answers:



    Simply Google search "Amira foods, fraud" to see more for yourself.

Add your comment.

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: 2853657, ~/Articles/ArticleHandler.aspx, 9/3/2015 5:33:05 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...

Jeremy Bowman

Fool since 2011. I write about consumer goods, the big picture, and whatever else piques my interest. Follow me on Twitter to see my latest articles, and for commentary on hot topics in retail and the broad market.

Today's Market

updated Moments ago Sponsored by:
DOW 16,374.76 23.38 0.14%
S&P 500 1,951.13 2.27 0.12%
NASD 4,733.50 -16.48 -0.35%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/3/2015 4:05 PM
ANFI $4.09 Down -0.28 -6.41%
Amira Nature Foods CAPS Rating: **