What happened

Shares of industrial equipment-maker Colfax Corporation (NYSE:CFX) fell as much is 21% in early trading Monday. Colfax reported its Q3 2017 earnings Monday morning, wherein pro forma profits of $0.42 per share net Wall Street's expectations, but sales of $844.5 million fell far short of analyst predictions for a $913 million quarter.

After rebounding somewhat, Colfax stock is still down 13.7% as of 11:15 a.m. EST.

Cartoon figures ponder stock chart falling through floor

Colfax met Wall Street's earnings estimates, so why is its stock down? Image source: Getty Images.

So what

The good news is that, objectively speaking, Colfax's report actually wasn't that bad. Sales may have missed Wall Street estimates, but Colfax's revenues were still up more than 10% year over year. Calculated according to GAAP accounting principles, Colfax earned net income of $0.37 per diluted share, up 61% in comparison to last year's Q3.

Now what

Guiding for the rest of this year, Colfax reaffirmed its prior earnings guidance of between $1.65 and $1.75 in "adjusted net income per share." Actual GAAP profits should range between $1.34 and $1.44 per share. Both of these figures include the anticipated $0.25 to $0.28 per share profit contributed by Colfax's fluid handling business, which is currently up for sale. Additionally, Colfax expects to report a "gain on the divestiture" of this subsidiary.

Colfax's valuation is in flux, with guided profit incorporating earnings from a division that Colfax will soon no longer possess -- but not including the anticipated proceeds from selling that division. Currently priced at 25.7 times trailing earnings, Colfax stock looks expensive at present. Excluding the gains from the coming sale, I expect it will look even more expensive after restructuring.