It's a dilemma all Foolish writers face. When we see Mr. Market panic and sell off a great company on a lark, do we swoop in and pick up the shares, or stand at a distance, pointing and shouting to you, our dear readers: "Look! Free money!"
The Motley Fool has a disclosure policy, you see. We want you to know for certain-sure that we won't use one hand to type an article hyping (or dissing) a stock while using the other hand to tap the sell (or buy) button on our own online brokerage accounts. So we have a rule around here: No trading in a stock for 10 days before, or after, writing about it. No abusing our readers' trust for our own material gain.
But that policy does have a downside: As writers, we sometimes must choose between advising you of an opportunity, or clamming up and making the trade ourselves. Such was the dilemma I faced when Natus Medical
So here's the deal. On Thursday, Natus reported its Q2 numbers, which went a little something like this:
- 42% sales growth, bolstered again by revenue tacked on from its acquisitions of Deltamed and Olympic Medical. (For the record, that's better sales growth than we saw last quarter.)
- 43% growth in earnings per share, in line with sales growth.
- Among its expenses, only R&D spending outran sales growth at 78% (and for the record, I consider heavy R&D spending a plus in a medical-equipment maker). Neither advertising nor administrative costs rose as fast as sales.
Moreover, Natus upped its guidance for the full fiscal year, and it now expects to see $118.3 million to $119.3 million in sales and $0.49 to $0.52 per share in earnings. While this is just a "reiteration" rather than an increase, it's worth pointing out that analysts on average expect Natus to hit only the lower number -- creating a real possibility that Natus will outperform estimates by year-end.
If you see something in the above that justifies the 10% haircut that Natus has endured since reporting earnings, I'd love to hear it. Otherwise -- and barring Mr. Market coming to his senses and bidding the price back up -- I'm planning to pull out my checkbook come Aug. 17.
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