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Why Shares of AEP Industries Dropped Today

By Travis Hoium – Mar 12, 2014 at 10:53AM

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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 plastic filmmaker AEP Industries (NASDAQ: AEPI) fell 10% today after reporting earnings.

So what: Net sales increased 2% in the fourth quarter to $272.5 million but only because a 7% increase in prices offset a 4% decline in volume. The company swung from a profit of $6.9 million a year ago to a loss of $3.7 million last quarter.

Now what: Management said that even the price increases the company put in place couldn't cover higher costs in the quarter. To make matters worse, competition was high and that's why volumes were even lower in the quarter. That's enough to keep me out of the stock today and I'd like to see improvement in both growth and margins before jumping in.

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.

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