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 Forest Oil Corp. (NYSE: FST) dropped 11% in intraday trading today after fourth-quarter adjusted EPS of $0.44 fell short of the consensus estimate of $0.47 and management lowered its 2011 volume forecast. 

So what: Revenue of $124 million was 10% below the consensus forecast, pressured by declining prices. Adjusted EPS, EBITDA, and cash flow all fell from the year-ago quarter because of a decline in prices and a reduction in realized gains on derivatives.

Now what: Sales volume guidance for 2011 was lowered by 4% while per-unit production cost guidance was reiterated with no change. No EPS guidance was provided, but earnings are sensitive to derivatives and foreign exchange gains/losses in addition to volatile natural gas and oil prices. With the stock trading at a forward P/E ratio of 22.2 and EPS estimates likely to come down, the risk does not seem to justify the reward.

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