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 Skullcandy, Inc. (SKUL) were rocking out today, climbing as much as 15% on a strong first-quarter earnings report.
So what: The maker of headphones and other audio accessories returned to revenue growth in the quarter as sales improved 5.4% to $39.1 million, slightly below expectations at $39.23 million. On the bottom line, its performance was stronger as its loss per share narrowed from negative $0.25 to negative $0.12, beating estimates at negative $0.17. CEO Hoby Darling noted that "gross margins stabilized and we were able to leverage operating expenses while continuing to invest in key long-term growth drivers such as demand creation, innovation and talent." Sales growth was nearly flat in North America, but improved 19.7% internationally, driving most of the revenue gains.
Now what: Looking ahead, Skullcandy's full-year guidance was also promising as the company raised its earnings-per-share forecast from $0.10-$0.14 to $0.16-$0.20, ahead of the analyst view at $0.13. After a hot start out of the gate, shares cooled off later in the session, trading up 5%. While raising guidance is always a positive sign, I'd like to see revenue growing faster before betting on a stock with a forward P/E of 35.
