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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 0.23% ) 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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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FOE
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