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: Checkpoint Systems (NYSE: CKP) dropped 15% in intraday trading today after fourth-quarter non-GAAP EPS of $0.36 missed the consensus estimate of $0.40.

So what: The company's challenges were evident as fourth-quarter revenue fell 1% year-over-year. Both GAAP EPS of $0.19 and non-GAAP EPS declined from the year-ago quarter (60% and 39%, respectively) due to gross margin pressure, restructuring expenses and acquisition-related costs.

Now what: Guidance for 2011 assumes significant improvement after a challenging 2010, calling for non-GAAP EPS of $1.27 to $1.41 compared with $1.00 in 2010 and the consensus estimate of $1.34. The stock's forward P/E ratio based on non-GAAP guidance is a reasonable 15.1 to 16.8. However, there was no GAAP guidance, and the P/E ratio is a rich 31.8 times GAAP EPS for both 2009 and 2010. With retail still under pressure, the risk/reward on this stock appears unattractive.


Interested in more info on Checkpoint Systems? Add it to your watchlist by clicking 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.