Why Elizabeth Arden Shares Crashed
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 cosmetics company Elizabeth Arden plummeted 19% today after its quarterly results and outlook missed Wall Street expectations.
So what: The stock has slumped in recent months on skepticism over its turnaround prospects, and today's fourth-quarter numbers -- adjusted EPS fell 63% year over year on a revenue increase of just 0.8% -- coupled with downbeat guidance only reinforce that doubt. While the company called 2013 a "transitional year" as it worked to make over its namesake brand, the results suggest that the restructuring struggles will carry well into 2014, as well.
Now what: Management now sees full-year 2014 EPS of $2.15 to $2.30, well below the average analyst estimate of $2.85. "I am confident that with the acquisitions and restructuring activities, including those associated with the Elizabeth Arden brand repositioning, behind us and more conservative forward guidance, we will return to systematic improvement in gross margins, EBITDA margins and return on invested capital," said Chairman and CEO E. Scott Beattie. Given the company's still-hefty debt load and weakening competitive position, however, I wouldn't be so quick to bet on that bullish talk.
The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.
The article Why Elizabeth Arden Shares Crashed originally appeared on Fool.com.Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.