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What: Shares of women's accessories maker Vera Bradley (NASDAQ:VRA) were on the discount rack today, falling as much as 13% after investors were unimpressed with the guidance in its earnings report.
So what: The handbag maker actually beat estimates in the quarter, posting EPS of $0.44 a share, up from $0.32 a year ago, and topping expectations of $0.38. Revenues grew 14% to $138.3 million, also ahead of estimates, and CEO Michael Ray credited "the strength of the brand and distinctive products" for the strong quarter. However, management guided fourth-quarter earnings at $0.55 to $0.57, below the Street's projections at $0.60.
Now what: This guidance could simply be a cautious response to the fiscal cliff as we've seen a number of companies give downbeat forecasts in earnings reports over the last few days. The fourth quarter is always important for retailers, but the 13% drop seems like an overreaction here. After all, the full-year forecast still tops what the experts had expected, and there is still plenty of growth potential. In other words, the beat in the third quarter outweighs the projected loss in the fourth. I'd see today's drop as a buying opportunity.
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Jeremy Bowman has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. 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.