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What happened

Shares of industrial distributor HD Supply Holdings Inc (NASDAQ:HDS) fell as much as 17.1% on Wednesday after reporting earnings. At 11:50 a.m. EDT, shares were still down 15.4%.

So what

Fiscal second-quarter sales rose 4.1% to $2.0 billion, and net income fell 10.1% to $98 million, or $0.49 per share. Adjusted for one-time items, earnings were $171 million, or $0.85 per share, but still fell $0.03 short of estimates. 

The other bad news was third-quarter guidance of $1.99 billion to $2.04 billion in revenue, with earnings of $0.77 to $0.82 per share. Next quarter, analysts were expecting revenue to be $2.06 billion and earnings to be $0.91 per share. 

What shouldn't go overlooked is that management still expects to grow the top line between 3% and 6% this year, and to take market share from competitors. That may not meet the market's expectations, but it's a good result nonetheless.

Now what

When a company misses expectations, it can cause a huge reaction in the stock market. But this move should be put into perspective. Analysts are expecting HD Supply Holdings to earn $2.72 per share this year, meaning the stock trades at 11 times earnings. And revenue is going to grow mid-single digits as well.

I think the market's reaction is a bit overdone, given the growth and value shares are at today. And for long-term investors looking for a company with stable cash flows, HD Supply Holdings is a great option.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.