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Why Wabash National Corporation's Shares Plunged 12% Today

By Travis Hoium – Updated Oct 25, 2016 at 8:32AM

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Not even an earnings beat could save shares of Wabash National Corporation from the market's wrath today.

Image source: Getty Images.

What happened 

Shares of trailer manufacturer Wabash National Corporation (WNC 2.37%) fell as much as 12.1% on Tuesday after reporting third quarter earnings. At 1:15 p.m. EDT shares were down 11.7% on the day.

So what

Revenue fell 13% during the quarter to $464 million as shipments shrunk, but pricing offset the lost sales to improve the bottom line. Earnings actually rose slightly to $32.9 million on an adjusted basis and earnings per share of $0.50 beat estimates by $0.03.

What stuck out for investors was that trailer shipments were 15,450 in the quarter, at the low end of the 15,000 to 16,500 guidance management had given. And 2016 shipments overall are expected to be on the low end of the 60,000 to 62,000 range management previously gave.

Now what

Investors never like it when a company misses expectations and that’s why shares are down so much Tuesday. But taking a step back, investors should be happy that margins are on the rise and the company is still making a lot of money. From a value perspective, shares are still trading at just 6.2 times trailing earnings, so there’s a lot of pessimism priced into the stock.

The selloff in shares is harsh given the small shipments miss and great value in the stock. Long-term investors should see this as a bump in the road, not a reason to get out of the trailer business altogether.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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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