Why Nam Tai Shares Shorted Out

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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 Nam Tai Electronics have plunged by 15% today after the company released second-quarter financials that contained a far larger loss per share than was expected.

So what: The lone analyst covering the Chinese electronics manufacturer had expected it to report $145.2 million in revenue and earnings of $0.05 per share. Nam Tai trounced the top-line estimate with $167.9 million in second-quarter revenue, a 64% year-over-year increase, but it reported a big loss of $0.71 per share. That totaled $31.9 million in actual losses, and the company noted in its report that it recorded $41 million in losses from discontinued businesses. A $9 million net profit from continuing operations would have been equivalent to $0.20 in EPS, which is well ahead of expectations.

Now what: It's always tough to analogize American investing standards to Chinese companies listed on American markets. They rarely perform as you'd expect a similar U.S. company to perform, simply because many investors remain uncertain of the veracity of their financials. However, Nam Tai is quite a high-dividend stock now, with a yield over 8% following the plunge. It might be worth a flier, provided you can be confident that the company won't go belly up.

Want more news and updates? Add Nam Tai Electronics to your watchlist now.

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The article Why Nam Tai Shares Shorted Out originally appeared on Fool.com.

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