What happened

Manitowoc (MTW -3.27%) spun off its restaurant equipment-making division Welbilt (WBT) last year -- and judging from today's results, Manitowoc may have made the right decision to toss Welbilt overboard. Shares of Welbilt are tumbling in midmorning trading, down 22.6% as of 11:10 a.m. EDT, after the company reported Q3 earnings that fell short of analyst expectations.

Wall Street had predicted Welbilt would earn $0.27 per share on sales of $421.3 million in Q3. Instead, Welbilt reported just a $0.19-per-share profit today ($0.25 "adjusted"), and on sales of only $412.9 million.

Frost covering the inside of a freezer

Investors are giving Welbilt stock the cold shoulder after earnings. Image source: Getty Images.

So what

From a sales perspective, Welbilt's results actually weren't all that bad. Q3 revenue grew 8.5% year over year, and nearly half of that growth was "organic" (i.e., not coming from acquisitions). However, Welbilt's profits declined 14% as the company struggled to overcome "margin headwinds" caused by "rising freight costs and from the section 232 tariffs on raw materials" instituted by the Trump Administration.

Now what

And you can expect more of the same in the year's final quarter, now under way. Updating guidance for the full fiscal year, Welbilt management warned that although it expects to end the year with sales up 8% to 10% over 2017 levels, "adjusted earnings per share" (those are the pro forma profits Wall Street tends to focus on when setting earnings targets) will probably range from only $0.73 and $0.81 per share.

Taken at the midpoint, this works out to zero earnings growth compared to last year, despite sales growing strongly. Arguably worse -- $0.77 a share would be a good $0.11 less than what Wall Street will be looking for at year-end.

No wonder investors are deciding to get out now.