Why Scheitzer-Mauduit's Shares Dropped
Is this meaningful or just another movement?
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 paper maker Schweitzer-Mauduit International (NYSE:SWM) dropped 10% today, after releasing earnings.
So what: Revenue fell 8%, to $196.8 million in the quarter, and net income dropped 65%, to $16.5 million, or $0.53 per share. Adjusted EPS, which takes out on-time items, was $0.88, but still fell $0.10 short of estimates.
Now what: The fourth quarter results were uninspiring, and guidance didn't help either. The company expects earnings of $3.70 per share next year, well below the $4.09 analysts expected. I don't see operations improving any time soon, and the best-case scenario seems to be flat revenue going forward. That's not a buy signal to me, so I'll avoid this discount today.
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