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.
Interested in more info on AEP Industries? Add it to your watchlist by clicking here.
