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Why Ferro Corporation's Stock Dropped 18% Today

By Travis Hoium – Jul 30, 2015 at 12:48PM

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A disappointing quarter has this stock plunging, but is the sell-off overdone?

What: Shares of Ferro Corporation (FOE) fell as much as 18% today after the company reported second-quarter earnings.

So what: Net sales dropped 8.8% in the quarter to $268.2 million and net income fell 34% to $6.6 million, or $0.14 per share, for continued operations. After adjusting for one-time items, the company earned $0.20 per share, but that fell short of the $0.25 estimate Wall Street had set, and that's left investors disappointed today.  

Now what: A strong dollar is hurting sales at Ferro, as it is for most American companies right now. But profit margins have increased 2.5% over the past year, so a focus on high-value products is beginning to pay off. I think the sell-off is overdone considering the steady improvement and shares trading at just under 15 times earnings. That's a decent value in today's market.

Travis Hoium 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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