Why The Timken Company's Shares Dropped

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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 parts manufacturer Timken (NYS: TKR) fell 21% today after the company released earnings.

So what: Revenue of $1.3 billion fell well short of the $1.45 billion analysts expected and was up just 1% from a year ago. Net income, however, was $183.6 million, or $1.86 per share, well above estimates of $1.49 from analysts.


Now what: Second-quarter results were mixed but the thing investors are focusing on today is full-year earnings guidance, which the company lowered by $1.30 to a range of $5.00-$5.30 per share. At that level shares still trade at below seven times 2012 earnings; even on the low end, it's a reasonable value right now. The company may not be growing rapidly but it's still growing and with a P/E ratio of just seven I think investors are getting a good value and shares can move higher from here.

Interested in more info on Timken? Add it to your watchlist byclicking here.

The article Why The Timken Company's Shares Dropped originally appeared on Fool.com.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. 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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