Why Lurkin Industries' 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 energy supplier Lufkin Industries (NAS: LUFK) fell 10% today, after issuing weak guidance in it earnings report.

So what: In the third quarter, revenue rose 47%, to $340.3 million, and earnings rose 82%, to $26.3 million, or $0.78 per share. The results were slightly better than expected, but the fourth quarter is going to be weaker than expected. The company cut its full-year earnings estimate to $2.81 to $2.91 per share, which is below a previous estimate of $3.00 to $3.20, and below analyst expectations of $3.00 per share.


Now what: The company said that prices have fallen in recent weeks, and customers aren't spending as much as expected on capital goods going into 2013. The lower spend rate is something to watch, especially with energy prices as low as they are. Looking forward, the company isn't terribly overvalued at 12 times forward earnings, even if estimates are lowered, but I'd prefer to see more certainty before buying in.

Interested in more info on Lufkin Industries? Add it to your watchlist by clicking here.

The article Why Lurkin Industries' Shares Dropped originally appeared on Fool.com.

Fool contributor Travis Hoium has no positions in the stocks mentioned above. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDrawThe Motley Fool has no positions in the stocks mentioned above. 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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