Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of KEMET Tumbled Today

By Timothy Green - Updated Apr 25, 2019 at 12:48AM

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

A mixed-bag quarterly report and talk of recent weakness was not what investors wanted to hear.

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.

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

KEMET Corporation Stock Quote
KEMET Corporation

*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 analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/28/2022.

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.