Shares of truck-trailer manufacturer Wabash National Corporation (NYSE:WNC) are down 11.8% as of 2:00 p.m. EDT today. The reason for today's decline is tied to the company's earnings, which Wabash reported after the close yesterday.
As is the case with any significant post-earnings price move, today's plunge relates to missing expectations. The company's revenue of $435 million and per-share earnings of $0.37 both missed expectations. Those results were also well below Wabash's results from the same quarter last year. To add insult to injury, management narrowed its 2017 earnings guidance from $1.44 to $1.56 per share to $1.44 to $1.50 per share.
Backing out the lens, though, this market reaction seems a bit overdone. To compare these results to the prior-year's results and say that this one was a failure seems a bit shortsighted when you consider that Q2 2016 was the best quarter in the company's history.
Also, fiscal first-quarter results were weaker than these, but Wall Street decided to pump up shares by 10% after the prior-quarter's results. What's more, Wabash's management also revised its guidance for trailers shipped this quarter to 53,000 to 56,000. Yet, when the company announces that it has slightly better results and narrows its earnings guidance, it merits an 11% drop?
This stock-price drop doesn't seem to coincide with what's going on at Wabash National right now. Perhaps the truck-trailer market has hit a high point, and the company's sales will deteriorate from here. If that's the case, then Wall Street would have a reason to sell off this stock. Looking at Wabash's results, though, it seems that the trailer market is in okay shape for at least the rest of the year, and tank trailers could see a nice boost as the petrochemical manufacturing boom hits the Gulf Coast.
Also, the company seems to be in a great financial position to keep its share repurchases going for a while, as well as fund its dividend to shareholders. For those invested in Wabash at the moment, yesterday's earnings and today's stock-price reaction are hardly enough to change the investment thesis.