Altra Holdings Shares Plunged: What You Need to Know

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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 power transmission and motion control products manufacturer Altra Holdings (NAS: AIMC) are down 12% after the company's fourth quarter-earnings disappointed.

So what: Shareholders should actually be thrilled at being down only 12%, because the stock had been down 21% earlier. For the quarter, Altra reported an adjusted profit of $0.24 on sales of $171.7 million. Wall Street had been looking for Altra to earn $0.33 on sales of $172.3 million. The company's 2012 forecast also came in at the low end of the forecast range. Profit is expected to range from $1.50 to $1.60 with sales of $740 million-$760 million.

Now what: Investors have a right to be skeptical given the laundry list of problems Altra gave for the weaker results. A plant shutdown due to automotive customer inventory adjustments, an extended holiday shutdown in Europe, and a rise in lower-margin products being sold during the quarter were the reasons Altra cited for the weakness. This doesn't seem like an overnight fix, and -- knowing this -- I'd keep my distance from the company even after today's drop.

Craving more input? Start by adding Altra Holdings to your free and personalized watchlist so you can keep up on the latest news with the company.

At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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