Why Shares of Power Integrations Inc Plunged 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 of energy industry supplier Power Integrations Inc (NASDAQ: POWI  ) dropped as much as 35% today after reporting earnings.

So what: Revenue rose 8% from a year ago to $83.1 million, and non-GAAP earnings jumped 19% to $0.56 per share. The problem is that revenue growth fell short of estimates, and earnings per share were $0.03 short as well.  

Now what: This is a huge sell-off for an earnings miss, particularly one that only missed by a few pennies. Management also said it expected sequential revenue growth next quarter as growth applications pick up. It looks like the sell-off was way overdone, and with shares trading at just 17 times this year's estimates, I think there's upside even after this earnings miss.

Three stock picks to ride America's energy bonanza
Record oil and natural gas production is revolutionizing the United States' energy position. Finding the right plays while historic amounts of capital expenditures are flooding the industry will pad your investment nest egg. For this reason, the Motley Fool is offering a look at three energy companies using a small IRS "loophole" to help line investor pockets. Learn this strategy, and the energy companies taking advantage, in our special report "The IRS Is Daring You to Make This Energy Investment." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 


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

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.

DocumentId: 2937768, ~/Articles/ArticleHandler.aspx, 7/30/2014 2:13:49 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