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 AEP Industries (NASDAQ:AEPI) jumped 18% today after releasing earnings.
So what: The fiscal third quarter ending July 31 saw revenues fall slightly to $291.9 million and net income drop from $12.3 million to $1.8 million, or $0.32 per share. But analysts were only expecting $0.26 per share in earnings so even falling results beat what the market had priced in.
Now what: Resin costs can be very volatile and that's a big driver of the decreased profit year over year. That's a challenge the company will continue to face but a 1% decline in volumes is of even more concern over the long term. With an absence of growth I think paying 38 times fiscal 2014 earnings estimates is too expensive and today's pop is very much overdone.
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