Shares of Dutch electronics veteran Philips (NYSE:PHG) fell as much as 9.7% on Monday morning following the release of disappointing third-quarter results. By 11:40 a.m. EDT, the stock had recovered slightly to a 9% drop.
Philips' third-quarter sales rose 3.8% year over year in local currencies, landing at $4.94 billion. Accounting for the euro's falling exchange rates, dollar-to-dollar growth would shrink to 1.1% when using historical euro-to-dollar rates for the 2017 report.
Earnings fell 6% to $0.35 per share, while adjusted EBITA profits -- an alternative cash flow metric that Philips has relied on for many years -- rose 9% to $651 million, all in constant currencies.
European analysts had been looking for EBITA profits of roughly $670 million on top-line sales in the neighborhood of $5.0 billion. Comparable sales grew 4% above the year-ago period, again short of analysts' 5.4% expectations.
On the upside, Philips' management simply reaffirmed its full-year financial targets, which suggests an upturn in the fourth quarter's early going. Incoming order volumes also rose 11% in the third quarter, pointing to beefier revenues in the near future.
Putting it all together, Philips' share price move today looks like a knee-jerk overreaction to short-lived issues. If I'm reading these tea leaves correctly, I wouldn't be surprised to see the stock gaining back these losses in three months.