What happened

Shares of passive electronic component provider KEMET (KEM) plunged on Thursday after the company reported mixed third-quarter results. Revenue came up a bit short of analyst expectations, while adjusted earnings were better than expected. The stock was down about 18.5% at 11:50 a.m. EST.

So what

KEMET reported third-quarter revenue of $350.2 million, up 14.2% year over year but about $4.1 million below the average analyst estimate. Non-GAAP (generally accepted accounting principles) earnings per share came in at $1.07, up from $0.52 in the prior-year period and $0.13 higher than analysts were expecting.

A declining chart.

Image source: Getty Images.

Gross margin was 35.2% during the quarter, up 520 basis points year over year. The company pointed to improvements in the solid capacitor segment for the margin boost. Operating income nearly doubled thanks to higher revenue and the improved gross margin.

Now what

Talk of weakness in some markets could be spooking investors. KEMET CEO William Lowe mentioned in his remarks that the company had experienced recent weakness in certain consumer markets and in Asia. While KEMET is currently putting up double-digit revenue growth, investors could be concerned about a slowdown.

KEMET expects some of that weakness to be offset by a few factors, including continued strength in ceramic products and customer-financed capacity agreements. But that wasn't reassuring enough to prevent a steep decline in the stock price.

Check out the latest KEMET earnings call transcript.