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Why B/E Aerospace Crashed 12% Today

By Brian Pacampara – Jul 22, 2015 at 6:21AM

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Is this meaningful? Or just another movement?

What: Shares of aircraft interior manufacturer B/E Aerospace (BEAV) plunged 12% on Wednesday after the company's quarterly results and outlook missed Wall Street estimates.

So what: The stock has slumped in recent months on fears over slowing growth coming into the quarter, and today's Q2 results -- EPS of $0.75 on revenue of $700.6 million versus the consensus of $0.76 and $704.6 million -- coupled with downbeat guidance only reinforce those concerns. Results remain weighed down by unfavorable euro exchange rates, a further decline in its defense business, and a slump in Russian demand due to sanctions and the collapse in oil prices, making B/E's hefty $2 billion-plus debt load all the more worrisome to investors.

Now what: Management now sees full-year 2015 EPS of roughly $3.03 and revenue of $2.8 billion, below Wall Street's view of $3.10 and $2.83 billion, but expects demand to pick up nicely over the longer term. "We expect to provide our first look at full-year 2016 in October as we have done historically," said Executive Chairman Amin J. Khoury. "However, notwithstanding the Company's record backlog, the timing of deliveries is such that we expect 2016 revenues to be 1 to 2 percent higher as compared to 2015 and we continue to expect a strong acceleration in the 2017 revenue growth rate." When you couple today's double-digit price plunge with management's recent efforts to finally put a dent in the company's debt load -- the outstanding term loan was reduced by $125 million in July, with additional repayments later this year -- it might even be an opportune time to buy into that optimism.

Brian Pacampara 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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