What happened

Shares of Nova Measuring Instruments (NASDAQ:NVMI) slumped on Wednesday following a generally positive third-quarter report. Nova beat analyst estimates for earnings and matched expectations for its fourth-quarter guidance, but it wasn't enough to prevent the stock from falling. With shares having soared year to date, Nova's results may have simply not been good enough. The stock was down about 12% at 11:45 a.m. EDT.

So what

Nova reported third-quarter revenue of $54.1 million, up 22.7% year over year and in line with the average analyst estimate. The company pointed to strength in its Dimensional and Materials metrology product lines as the main drivers behind the double-digit revenue growth. Product revenue grew 24.8% to $41.1 million, while services revenue grew 16.4% to $12.9 million.

A declining stock chart.

Image source: Getty Images.

Non-GAAP earnings per share came in at $0.46, up from $0.34 in the prior-year period and $0.07 better than analysts expected. Looking ahead to the fourth quarter, Nova expects to produce revenue of between $53 million and $57 million, and non-GAAP EPS of between $0.34 and $0.42. Both ranges straddle the consensus analyst estimates.

Nova CEO Eitan Oppenhain summed up the company's progress: "With another record year clearly in our sights, we are progressing steadily toward our long-term growth targets while enhancing our product offering and expanding our market presence."

Now what

There wasn't very much to dislike about Nova's third-quarter results or fourth-quarter guidance, but the stock tumbled regardless. Even after Wednesday's plunge, shares of Nova have more than doubled since the beginning of the year. That rally may have pushed the stock price too high, too fast, leading to expectations that the company simply couldn't meet.

Nova will need to keep growing revenue and earnings at a brisk pace to have any chance of keeping the gains racked up in 2017.

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