Shares of commercial kitchen equipment manufacturer Welbilt (NYSE:WBT) jumped as much as 28.2% in trading Tuesday after reporting first-quarter 2020 results. Shares slid throughout the day and at 3:20 p.m. EDT were only up 4.4% for the day.
Revenue fell 12.4% in the quarter to $328.9 million and organic sales were down 11.6%. Net loss was $15.1 million, down from a $2.6 million loss a year ago, although adjusted net earnings were $0.01 per share.
Analysts were expecting $323.5 million in revenue and adjusted earnings of $0.01 per share, so that's what's causing the excitement today. But management was coy in projecting just how bad the current economic disruption would be on its business through the rest of the year.
The harsh reality is that we haven't seen the real impact COVID-19 and its fallout will have on the restaurant business that Welbilt serves. Restaurants are just now starting to close en masse and its unlikely business will return in droves even when locations open up again. And the worst news for Welbilt would be lots of equipment hitting salvage markets and a sharp reduction in new restaurant openings, both of which I think are likely. That's what will keep me out of Welbilt's stock, despite today's pop.