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What: Shares of rare earth miner Molycorp (NYSE:MCP) are up 33% today after reporting better-than-expected earnings.
So what: First quarter revenue was up 9% sequentially, to $146.4 million, ahead of the $135.6 million estimate. On the bottom line, net loss was $47.2 million, or $0.33 per share, but when you adjust for one-time items, the loss was just $0.15 per share versus the $0.31 estimate.
Now what: Beating earnings estimates is always good, but let's not forget that Molycorp is still losing money hand over fist. Management said that customers are beginning to buy in more normal patterns again as stockpiles fall, but we haven't seen an increase in rare earth prices, which would really help earnings. I'm not as bearish as I was a year ago on Molycorp, but I want to see this promise of positive earnings play out before buying the stock. When the company floods the market with another expansion of production, I'm afraid it will cause prices to plunge again, and we'll be facing losses again next year.
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Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.
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