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 China-based online game developer Perfect World
So what: Perfect World's third quarter missed analyst estimates, even though rivals from Shanda Games
Now what: "Quarterly fluctuation is a natural part of our product cycle," says CEO Michael Chi. That's true enough, and the lumps get even more jarring when you consider Perfect World's small-cap scale. But profit margins are on the decline, and sales growth appears to have hit a modest plateau even if you calculate these metrics over a trailing-12-month period to smooth out the short-term bumps. Online games in China may be a hot sector, but Perfect World doesn't look like the best pick in the industry. Our Rule Breakers team has some stronger ideas for this market -- just grab a totally free 30-day trial pass to see what they are.
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Fool contributor Anders Bylund holds no position in any of the companies mentioned. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.