RPC Shares Plunged: What You Need to Know
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 RPC (NYS: RES) fell as much as 10% today after the company released earnings.
So what: Normally, when a stock falls this far it misses expectations by a mile, but RPC was actually better than analysts expected in the second quarter. Revenue of $443 million beat estimates of $410.5 million and earnings per share were in line with expectations at $0.50.
Now what: So why the fuss today? Higher revenue and profit in line with expectations means margins were lower than expected -- that's what investors are focused on today. Management pointed to higher costs for materials and maintenance costs for the lower margins. Before we panic too much here, I will point out that earnings were in line with expectations and the stock is only trading at 10.6 times forward earnings estimates, so this price dip looks like a buying opportunity to me.
Interested in more info on RPC? Add it to your watchlist.
At the time this article was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.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 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.