Please ensure Javascript is enabled for purposes of website accessibility

Why CalAmp Stock Plunged Today

By Steve Symington - Dec 11, 2018 at 2:51PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The machine-to-machine communications specialist just lowered its third-quarter outlook. Here's what investors need to know.

What happened

Shares of CalAmp (CAMP 3.44%) were down 16.2% as of 2:15 p.m. EST Tuesday after the machine-to-machine communications company reduced its fiscal third-quarter 2019 guidance.

Yesterday after the market closed, CalAmp told investors it now expects quarterly revenue in the range of $88 million to $89 million, adjusted EBITDA of $10.5 million to $11.5 million, and adjusted earnings per share of $0.23 to $0.25. By comparison, CalAmp's previous guidance (provided in late September) called for revenue of $94 million to $99 million, adjusted EBITDA of $12 million to $16 million, and adjusted net income of $0.29 to $0.35 per share. 

CalAmp headquarters building

Image source: CalAmp.

So what

CalAmp reminded investors that when it provided its old outlook, management detailed plans to accelerate their supply chain diversification program to shift manufacturing to providers with facilities outside of China -- a move made in response to recent trade tensions and tariff concerns between China and the United States.

"During the third quarter, CalAmp experienced various supply disruptions related to this transition, as well as extended lead times driven by component shortages," the company elaborated. "This resulted in inbound product supply delays at quarter end and impacted the company's ability to ship certain products to meet customer demand."

Now what

To be fair, CalAmp added that "management is taking steps to address these operational challenges." And investors can take solace knowing that -- with sustained demand for its products still intact -- CalAmp should emerge a stronger company better equipped to meet that demand going forward. Given its near-term challenges in the meantime, however, it's no surprise to see the stock pulling back today.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

CalAmp Corp. Stock Quote
CalAmp Corp.
CAMP
$6.31 (3.44%) $0.21

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
331%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/21/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.