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 Checkpoint Systems (UNKNOWN:CKP.DL) fell more than 16% early Friday after the company announced better-than-expected fourth quarter results and disappointing forward guidance.
So what: Quarterly revenue fell 5.8% year over year to $183.1 million, including a 3.8% decrease from the negative effects of foreign currency translation.Meanwhile, adjusted earnings before interest, taxes, depreciation and amortization rose 11% to $27.1 million, and earnings came in at $5.3 million, or $0.12 per diluted share, up from a loss of $0.12 per share in the same year-ago period. On an adjusted basis, net earnings fell 13% to $0.26 per share. Analysts, on average, were expecting adjusted earnings of $0.21 per share on sales of $171.9 million.
Checkpoint also authorized a special cash dividend of $0.50 per share, to be paid on April 10, 2015, to shareholders of record on March 20, 2015.
Now what: Going forward, however, Checkpoint expects fiscal 2015 revenue to be in the range of $575 million to $625 million, with adjusted EBITDA of $55 million to $68 million and adjusted earnings per diluted share of $0.40 to $0.50. Wall Street, for its part, was modeling significantly higher revenue and earnings of $650.9 million and $0.73 per share, respectively.
Checkpoint placed the blame on both expected currency headwinds -- as more than two-thirds of the company's revenue comes from international markets -- as well as large-scale capital projects undertaken by retailers, the timing of which is difficult to predict.
"While we continue to execute a number of EAS and RFID pilots and tests," explained Checkpoint CEO George Babich, "retailers remain cautious about their in-store capital expenditures. While it is certainly possible that some of these tests will transition into chainwide rollouts, our guidance assumes that none will occur during fiscal 2015."
In the end, that leaves plenty of room for Checkpoint to potentially outperform its cautious expectations. But for now, as long as currency headwinds remain and Checkpoint continues to build a more predictable revenue stream, I'm personally content watching from the sidelines.