Please ensure Javascript is enabled for purposes of website accessibility

Why Aceto Corporation's Shares Dropped Today

By Travis Hoium – Feb 7, 2014 at 4:09PM

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 pharmaceutical distributor Aceto Corporation (ACET) fell 13% today after the company reported earnings.

So what: Fiscal second-quarter sales were up 2.2%, to $116.5 million, and net income was up nearly 50%, to $6.8 million, or $0.24 per share. Revenue was $2.7 million below estimates, but early media reports from Thomson Reuters and others said the company missed by $30.5 million, which exaggerated the issue. 

Now what: Results were largely in-line with estimates, and even though reporting was misrepresented, I think the issues will pass quickly. There's really nothing alarming here, and investors looking to get in should see this as a buying opportunity. Shares now trade at just 14.7 times 2014 estimates and, considering the fact that Aceto has beaten estimates two of the last four quarters and is growing the bottom line quickly, I think the stock could be in for a nice run.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.

Stocks Mentioned

Aceto Corp. Stock Quote
Aceto Corp.

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

Related Articles

Premium Investing Services

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