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 Choice Hotels
So what: Wells cited a lack of near-term catalysts to support growth, TheStreet.com reported. Maybe so, but the company's first-quarter results still beat estimates. Revenue improved 7% to $115.3 million, while adjusted earnings moved up a penny to $0.28 a share. Wall Street had been looking for $114.9 million and $0.25 a share, respectively, according to Yahoo! Finance data.
Now what: Whether Wells is right, one thing's clear: Choice Hotels is expensive compared with its growth prospects and industry norms. According to Yahoo! Finance, comparable sector stocks trade for 23.6 times expected earnings and grow profit at 15.4% annually over the next five years. Choice trades for 22 times forward earnings yet is expected to grow profits by just 7% annually. After seeing that combo, it's hard to blame investors for selling.
Interested in more info on Choice Hotels? Add it to your watchlist.
Tim didn't own shares in any of the companies mentioned in this article at the time of publication. Check out his portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. 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 is also on Twitter as @TheMotleyFool. Its disclosure policy is at least 10% better than other disclosure policies.