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 rapid production company Proto Labs (NYSE:PRLB) jumped 26% today after releasing earnings.
So what: Fourth-quarter revenue rose 31.1% to $33.6 million, beating the consensus estimate of $32.7 million. Earnings per share of $0.31 were way ahead of the $0.26 analysts expected, driven by gross margin rising from 56.8% to 62.5%.
Now what: When you beat estimates by that margin, your stock often jumps, and when you're leading a rapid manufacturing revolution, it only bolsters the market's opinion about you. That's what drove Proto Labs today.
The question is whether it's still a buy today. Consider that Proto Labs is worth $1.3 billion and generated only $33.6 million in quarterly revenue. I love the margins and I love the business, but that's a steep price, especially in a fast-changing sector. I'd be a seller today.
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