Why Fairway Shares Got Tossed

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 Fairway Group Holdings were looking rotten today, falling 22% after it badly missed earnings estimates in its quarterly report.

So what: The gourmet grocer turned in a loss of $0.30 a share on expectations of a $0.07 shortfall, while revenues improved 14.1%, to $183.2 million, short of the consensus at $187.3 million. Same-store sales grew just 1% in the quarter, as shares of the recent IPO fell to its lowest level since May. Executive Chairman Charles Santoro ignored the loss, saying the company "continued to perform well" in the quarter, making private label penetration, and opening its 14th store in Nanuet, New York.

Now what: While shares probably deserve to take a hit after missing on top and bottom lines, investors would be wise to look past the quarter. Fairway is an expansion play, as the company hopes to grow from just 14 supermarkets currently, to 300 nationwide. The current lack of profits may be scary, but the chain does have near cult-like status in its native New York. If it can similarly delight customers nationwide, profits and share prices are bound to head north.

More growth stocks
Tired of watching your stocks creep up year after year at a glacial pace? Motley Fool co-founder David Gardner, founder of the No. 1 growth stock newsletter in the world, has developed a unique strategy for uncovering truly wealth-changing stock picks. And he wants to share it, along with a few of his favorite growth stock superstars, WITH YOU! It's a special 100% FREE report called, "6 Picks for Ultimate Growth." So stop settling for index-hugging gains... and click HERE for instant access to a whole new game plan of stock picks to help power your portfolio.

The article Why Fairway Shares Got Tossed originally appeared on Fool.com.

Fool contributor Jeremy Bowman 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.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

People are Reading