Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of cable expert General Cable
So what: When a company can hop one of Wall Street's hurdles in an earnings report, investors get giddy. When two hurdles are cleared, the market can get downright jubilant. That was the case for General Cable because it not only topped analysts' estimates for the quarter, but also offered an outlook for the next quarter that was ahead of expectations. The comparison with the third quarter of last year wasn't particularly kind to General Cable because gross margins were crunched and operating profit fell by more than half. Volume, however, was up 6.7% versus last year, thanks to strong gains in North America as well as Brazil, Thailand, and Chile.
Now what: Based on analyst estimates, General Cable's stock is trading at less than 12 times expected 2011 earnings. That looks pretty attractive for a company that has as broad of a reach and as much potential to benefit from global growth as General Cable. However, the company is relying on a continued economic recovery -- both in the U.S. and abroad -- and some moderation in the prices for copper and aluminum. Those two metals are key raw materials for the company's products, and until prices cool off, General Cable's margins likely will stay under pressure.
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