In these days when Wall Street seems to be looking for excuses to whack stocks, you have to admire a company that risks underpromising today in hopes of overdelivering in the future. And when a company dares to dial back the earnings expectations of analyst-prognosticators, it's just begging for a drubbing.
Case in point: financial software maker S1
But was that enough for Wall Street? Not a chance. The Street wants its cake today and demands promises of even more cake tomorrow. Or, lacking cake, it wants a promise of $0.04 in diluted earnings per share. And when S1 suggested that that number wasn't really realistic -- and that, in fact, S1 would be lucky to earn even a penny, and might lose $0.03 -- well, as I said, S1 got whacked, down nearly 8% in a day's trading.
It doesn't help that while S1 is trying to get its profits back on track, it's also breaking in a new CEO. Nor does it help that the new CEO, James Mahan, is planning to take his time getting to thoroughly learn the business before deciding how best to get it back on track.
Mahan expects that he will need "the next 60 to 90 days to define [his] plan for [S1's] success." And while that's both prudent and probably not that long of a time to try to learn the workings of a $300 million business, it's also about the length of the company's third quarter. So there's little promise for an immediate turnaround in S1's fortunes. Investors hoping for good news about its fortunes are almost certainly going to have to wait until the end of the year to hear it.
Faced with a choice between waiting six months to see whether S1 can report a turnaround, or investing today in one of S1's several competitors, each of which sports a lower forward P/E -- Corillian
For more Foolish news and views on S1, read:
Fool contributor Rich Smith owns shares of Corillian but of no other company mentioned above. The Motley Fool has a disclosure policy.
