Why Scheitzer-Mauduit's Shares Dropped

Is this meaningful or just another movement?

Travis Hoium
Travis Hoium
Feb 7, 2013 at 9:10PM

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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