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What: Shares of Comtech Telecommunications
So what: Comtech Telecommunications actually reported a very solid quarter that easily blew past analyst expectations in large part because expenses fell by a third. Comtech also benefited from a one-time $12.5 million payment from CPI International
Now what: Investing in the stock market is about looking forward, not dwelling on the past. Although Comtech provided investors with a stellar quarter, if you dig a bit deeper, the numbers aren't as impressive as they might seem. Comtech's expenses fell because it anticipated the drop in demand from their largest customer, the U.S. Army, and planned accordingly to keep costs in line. Comtech also didn't provide an exact number by which it expects revenue to decline, which could be another reason for today's fall. Leaving Wall Street in the dark about your revenue generation stream is generally not going to bode well for a company's stock price. Comtech pays out a tempting dividend, but with the overhang of a demand decline from its largest customer, I'd avoid this whole situation until we get some concrete expectations.
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Fool contributor Sean Williams does not own shares in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.