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What: NetApp (Nasdaq: NTAP) dropped 11% in intraday trading today after the storage company’s third fiscal quarter non-GAAP EPS beat by $0.02 but fourth fiscal quarter guidance fell short of consensus expectations.

So what: For the current quarter, management guidance calls for revenue growth of 15% to 20% and non-GAAP EPS of $0.49 to $0.53, compared with a consensus estimate of $0.54. The forecasted year-over-year change in non-GAAP EPS ranges between a decline of 2% and a rise of 6% is a massive deceleration compared with the 53% growth NetApp delivered over the past three fiscal quarters.  

Now what: Revenue guidance for the current quarter was in line with expectations, indicating that NetApp is experiencing strong unexpected margin pressure. EPS will also be reduced by an estimated 1.9% because of an increase in the share count related to outstanding warrants and convertible notes. With no indication when or how the company might revive EPS growth, the stock looks pricey at trailing P/E ratios of 28.2 times non-GAAP EPS and 33.4 times GAAP EPS.

Interested in more info on NetApp? Add it to your watchlist here.

Fool contributor Cindy Johnson does not own shares of any company named above. 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.