Why Innophos Holdings Shares Tanked

Before you go, we thought you'd like these...
Before you go close icon

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 food-additive maker Innophos Holdings (NYS: IPHS) were down 10% today after its earnings report failed to impress investors.

So what: Adjusted earnings per share of $0.81 fell short of analyst estimates of $0.90, and revenue came in slightly below Wall Street's view as well. While results in its core specialty phosphates segment were promising, its GTSP (fertilizer) and other segment recorded just breakeven adjusted operating income due to lower market prices. Management cited "an economic environment that became more challenging as the quarter progressed," but the company was able to increase sales despite lower demand and higher raw material costs for its specialty phosphates.


Now what: While near-term conditions don't look great, the company seems to be positioning itself well for future growth. Its recent acquisition of Kelatron, which also makes mineral products, has provided more than 20% growth so far this year, and the company sees further opportunities to maintain similar levels of growth. Management said they expect third-quarter performance to be similar to the second quarter, meaning analysts could lower their projections, but long term this looks like a good bet as an affordable stock with credible growth opportunities and a solid position in a niche industry.

Want to get your daily dose of Innophos? Just add Innophos Holdings to My Watchlist.

The article Why Innophos Holdings Shares Tanked originally appeared on Fool.com.

Fool contributorJeremy Bowmanholds no positions in the companies above. The Motley Fool has a disclosure policy.
We Fools may not all hold the same opinions, but we all believe that 
considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners