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 Interface (NASDAQ:TILE) jumped as much as 17% today after the modular carpet company reported better than expected earnings following the market close on Wednesday.
So what: Fourth-quarter revenue rose 8.1% to $272.1 million, highlighted by an 11.8% increase in sales in the Americas and 13.4% growth in Asia-Pacific. After pulling out one-time items including a $12 million loss on debt retirement, net income was $15.8 million, or $0.24 per share, beating Wall Street's estimate by $0.07.
Now what: Slow and steady improvement across the business helped drive the earnings beat this quarter. Gross margin increased by 40 basis points to 33.6% and SG&A expenses fell to 23.8% of sales from 26.6% a year ago.
This was the first time all year that earnings beat estimates, so I wouldn't call the strong results a trend yet. Plus, shares are trading at 30 times trailing earnings, a high multiple for a fairly slow-growth company. I like where the company's operations are headed, but the high valuation will keep me out of shares after today's bounce.
Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends Interface. The Motley Fool owns shares of Interface. Try any of our Foolish newsletter services free for 30 days. 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.