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's happening?
Shares of Littelfuse (LFUS +4.46%) dropped by as much as 11.9% early Wednesday after the circuit protection specialist reported mixed fourth-quarter results and disappointing guidance.
Why it's happening
Quarterly revenue climbed 4% year over year (or 7% excluding the negative effects of foreign exchange) to $206.6 million. This includes a 1% increase from its core electronics segment to $96.3 million, a 10% jump in automotive sensor sales to $80.3 million, and a slight decline from its smaller electrical business to just under $30 million. When all was said and done, that translated to a 6% decline in adjusted earnings to $1.02 per diluted share. Analysts, on average, were looking for higher earnings of $1.10 per share on lower revenue of $204.7 million.
For the current quarter, however, Littelfuse expects sales of $202 million to $212 million -- or relatively flat over the year-ago period after currency effects -- and earnings of $1.00 to $1.14 per diluted share. Wall Street was modeling higher first-quarter earnings and sales of $1.26 and $217.5 million, respectively.
"The combination of unfavorable currency effects, non-recurring charges and poor execution in a few areas of the business made for a challenging quarter," explained CEO Gordon Hunter. Littelfuse CFO Phil Franklin elaborated that with the solid performance of core automotive and electronics, combined with corrective actions they're taking for their electrical, automotive sensors, and commercial vehicle products, Littelfuse should be able to achieve 2015 earnings above $5.00 per share.
Even so, analysts were already expecting 2015 earnings of $5.41 per share, so it's little surprise the market is bidding down Littelfuse stock today.
