What happened
Plastic and metal product specialist Myers Industries (MYE 0.09%) underperformed a declining market on Wednesday. Shares were down 14% by 3 p.m. ET today, compared with a 0.6% drop in the S&P 500. That drop put Myers' stock back in negative territory for 2023, although shares are still comfortably beating the market over the past full year.
The drop was sparked by a lukewarm reception on Wall Street to management's fourth-quarter earnings report.
So what
Myers executives said before the market opened that sales rose 7% for the selling period that ended in late December, while adjusted earnings rose 39%. The company achieved solid profitability and cash flow, too, with help from a growing brand portfolio that now includes Mohawk Rubber. "2022 was a strong year," CEO Mike McGaugh said in a press release .
Yet there were some new stresses on the business, too. Myers reported falling sales volumes that needed to be offset by rising prices. Its distribution segment also reported lower profit margins as cost increases outpaced the company's ability to boost prices in the niche.
Now what
Wall Street wasn't thrilled with the 2023 outlook, which calls for sales to expand in the low- to mid-single digits. Organic revenue this past year was up 10%, for context. This outlook doesn't imply that a recession is striking any of its core markets, but it does take a cautious approach for the fiscal year ahead.
Myers issued a wide range of potential earnings outcomes for 2023, too, reflecting uncertainty around inflation and demand. Adjusted earnings could land anywhere between $1.55 and $1.85 per share, compared with $1.68 per share this past year.
The broader growth outlook is as bright as ever, though. Myers is aiming for higher sales in 2023 even following several years of big gains. Operating cash flow remains strong, easily covering the company's investment needs.
That's why today's share price decline is more about concerns over the short term than anything that seriously threatens the bullish thesis on this stock.
