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How Cree, Inc. Fell 18.1% in April

By Anders Bylund – May 8, 2017 at 6:00PM

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The third-quarter report raised more questions than it answered.

What happened

Shares of LED lighting manufacturer Cree (WOLF -1.17%) fell 18.1% in April 2017, according to data from S&P Global Market Intelligence.

So what

The bulk of Cree's April pain followed after the company's third-quarter report, which fell short of Wall Street's earnings forecasts. Share prices dipped as much as 16% lower the next day.

LED light bulbs.

Image source: Getty Images.

Now what

Cree's sales and earnings have not been inspiring in recent years, even as the company's signature LED lighting technologies started moving into the mainstream economy.

CREE Chart

CREE data by YCharts

"Our lighting team is strengthening the fundamentals and laying the groundwork to grow revenue and profits in this business, and I'm confident they will deliver," said Cree CEO Chuck Swoboda in the third-quarter earnings call. "We're uniquely positioned as a market-leading innovator in all 3 businesses and target growth in each of these segments over the next several years. "

But he had no specific target dates for these projected growth spurts, leaving both investors and analysts in the dark regarding long-term value estimates. The LED revolution always seems to be right around the corner, never quite ready to start. Until that changes, I find it hard to pull the trigger on a LED specialist's stock that trades for 41 times forward earnings and 15 times trailing EBITDA profits.

Anders Bylund has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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