Please ensure Javascript is enabled for purposes of website accessibility

Why II-VI Shares Plunged

By Brian D. Pacampara, CFA - Apr 23, 2013 at 12:23PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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 laser optics technologist II-VI (IIVI -7.36%) sank 12% today after its full-year guidance missed Wall Street expectations.

So what: II-VI's third-quarter results -- EPS of $0.25 on revenue of $145.2 million -- were just slightly below estimates, but downbeat guidance for the rest of the year reinforces concerns over slowing growth going forward. In fact, management blamed the weak outlook on softening demand across several of its business segments, giving investors little hope for a near-term turnaround. 

Now what: Management now sees full-year EPS of $0.84-0.89 on revenue of $550 million-$555 million, well below the consensus of $0.93 and $563.7 million. "We have experienced some cyclical softening in the optical communication market addressed primarily by our Near-Infrared Optics segment," CEO Francis Kramer cautioned. "In the Military and Materials segment, PRM continues to be affected by the start-up of its new rare earth product line. ... Demand for selenium and tellurium products continues to be low and, therefore, the pricing environment is a challenge." Of course, with the stock hitting a new 52-week low today and trading at a forward P/E of about 12, much of those headwinds might already be baked into the price.

Interested in more info on II-VI? Add it to your watchlist.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

II-VI Incorporated Stock Quote
II-VI Incorporated
$57.28 (-7.36%) $-4.55

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.