Why Shares of Federal-Mogul Corp. Decelerated

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 Federal-Mogul Corp. (NASDAQ: FDML  ) were sliding today, falling as much as 12% and finishing down 9% on a disappointing first-quarter earnings report.

So what: The auto-parts maker turned a per-share profit of $0.27 against expectations of $0.33, while sales missed expectations at $1.81 billion, increasing 7.2% to $1.78 billion. Despite the sell-off, the company saw a solid improvement from a year ago with net income from continuing operations more than doubling as co-CEO Daniel Ninivaggi said the manufacturer "continued to make progress strengthening our product portfolio and improving our cost structure."

Now what: European aftermarket sales remained weak, falling 3% as overall aftermarket sales rose just 0.8%. Still, its Powertrain segment saw sales improve 11%, beating broader market in Europe and North America where light vehicle sales improved just 3% and 4%, respectively. Taking the longer view, Federal-Mogul shares have wildly outperformed over the last year, up more than 200% even after today's slide, but this was the second straight earnings miss after series of strong beats so its days as a value play may be over. Carl Icahn is a majority shareholder, holding 81% of the company, so investors may want to pay attention to any moves he makes with the company, as that would likely guide shares up or down. 

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