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Why Briggs & Stratton's Shares Dropped 17% Today

By Travis Hoium - Updated Apr 22, 2019 at 2:10PM

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2019 isn't quite as bullish as investors expected.

What happened 

Shares of Briggs & Stratton (BGGS.Q) fell as much as 17.2% in early trading Thursday after the company reported fiscal second-quarter 2019 results. At 11:30 a.m. EST shares were still down 16.8% on the day and showed no signs of recovery. 

So what

Revenue was up 13.2% in the quarter to $505 million as sales into commercial markets continued to be strong. Net loss was $2.6 million, or $0.07 per share, as losses from buying back debt and business integration charges hit the bottom line. Without those one-time items, earnings were $8.4 million, or $0.20 per share. 

Man on riding lawn mower.

Image source: Getty Images.

Analysts were expecting only $463.9 million in revenue, but they did see $0.26 in earnings per share, which was where the earnings disappointment came in. On a guidance level, investors also weren't happy to see an earnings outlook of $1.10 to $1.30 per share, lower than Wall Street's $1.44 expectation. 

Now what

A lot of the guidance miss is out of Briggs & Stratton's hands, with management citing weather-related weakness in Australia and Europe. To add to matters, Sears' bankruptcy is expected to hurt sales by $30 million next year. When management doesn't see the growth investors are expecting, it can cause a stock to reset based on lower expectations, which is what we see today. Briggs & Stratton as a company isn't broken, its future earnings are just not quite as valuable as investors thought before earnings came out. 

Check out the latest Briggs & Stratton earnings call transcript.

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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