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Why CalAmp Corp. Stock Plunged Today

By Steve Symington – Sep 30, 2016 at 2:45PM

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Short-term macro headwinds are holding back the M2M specialist's overall growth.

Image source: CalAmp Corp.

What happened

Shares of CalAmp Corp. (CAMP 7.00%) were down 14.5% as of 1:30 p.m. EDT after the machine-to-machine communications specialist released weaker-than-expected fiscal second-quarter 2017 results.

So what

Quarterly revenue grew 29.6% year over year, to $90.5 million, including $6.7 million in revenue from satellite segment -- which shuttered its operations during the quarter as previously announced -- and 35.6% growth in wireless datacom segment sales, to $83.8 million. Included within the latter was $31.9 million in revenue from CalAmp's recent acquisition of vehicle recovery specialist LoJack.

On the bottom line, adjusted earnings per share remained flat from the same year-ago period, at $0.27, while adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 8.9% year over year, to $12.9 million.

For perspective, each of the aforementioned figures came in below the midpoints of CalAmp's guidance ranges, which called for revenue of $90 million to $95 million, adjusted net income per share of $0.25 to $0.31, and adjusted EBITDA of $12 million to $16 million.

To blame, according to CalAmp management, were "tough macro conditions in North America," which contributed to soft demand for MRM telematics products from certain key customers.

Now what

CalAmp did note, however, it's "seeing some firming of demand," and the company believes MRM product sales should improve later in the fiscal year and into 2018. 

But for the current quarter, CalAmp anticipates revenue of $81 million to $87 million, adjusted EBITDA of $11 million to $14 million, and adjusted net income per share of $0.24 to $0.30. Both the top and bottom lines of this guidance were below analysts' consensus estimates, which predicted CalAmp's fiscal Q3 revenue and earnings would be closer to $95 million and $0.31 per share, respectively.

Even though CalAmp's long-term growth story still holds, this was indeed a disappointing quarter relative to the expectations of both CalAmp and the market. So while I still think patient investors should have nothing about which to worry, it's unsurprising to see some taking a step back from CalAmp today.

Steve Symington has no position in any stocks mentioned. The Motley Fool recommends CalAmp. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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