Why 21Vianet Group Inc. Shares Tumbled 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 21Vianet Group  (NASDAQ: VNET  )  fell more than 11% early Friday, then settled to close down around 4%, after the Chinese Internet data center specialist reported mixed first-quarter results.

So what: Quarterly revenue rose 34.5% year over year to $94.3 million, which translated to adjusted earnings of $0.08 per diluted American depositary share. Analysts, on average, were looking for adjusted earnings of $0.10 per share on sales of $93.53 million.

For the current quarter, 21Vianet expects revenue in the range of $103.3 million to $105.9 million, which is roughly in line with expectations for sales of $104.6 million.

Finally, 21Vianet reiterated its full-year 2014 guidance for sales of RMB2.71 billion to RMB2.85 billion. Based on today's exchange rate, that translates to a range of $436.1 million to $458.6 million, the midpoint of which is roughly $6 million below analysts' expectation for 2014 sales of $453.6 million.

Now what: 21Vianet's top-line miss wasn't all that bad. But the stock also isn't particularly cheap, trading near 23 times next year's estimated earnings and 5.7 times trailing 12-month sales. That's why I'm still perfectly happy just keeping 21Vianet on my watchlist for now. 


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