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: The markets turned green almost everywhere today -- except for at Sykes Enterprises (Nasdaq: SYKE), down 24% by close of trading Tuesday.
So what: Which is kind of strange, when you consider that this provider of "customer contact management solutions" actually turned in a pretty good earnings report last night. Sales were up 7% year over year, and with operating margins rising by nearly half to 4.9%, Sykes turned in a near-triple in net profit on the bottom line -- $0.26 per share.
Now what: Now here's the bad news. Looking forward, Sykes says things are about to get a whole lot tougher. "Sluggish demand forecasts from clients," says Sykes, require management to roll back projected revenues and earnings for both Q3 and the fiscal year as a whole. When all's said and done, Sykes expects to earn just $0.99 to $1.04 per share this year -- that's a whole lot less than the $1.49 per share Wall Street had the company pegged for, and more than sufficient to explain the stock's 24% drop.
With a 47 P/E on the stock but only a 12.5% long-term growth rate -- a growth rate that now turns out to have been overly optimistic -- I can't blame investors for feeling pretty sick of Sykes today.
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