General Cable Shares Dropped: 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: Tuesday's been a "red" day for the stock market, but few stocks are looking more sunburned today than General Cable (NYS: BGC) , strung for a 15% loss.

So what: General Cable reported a miss on earnings and revenue yesterday evening, throwing in an earnings warning on the third quarter for good measure. Profits were up significantly from last year's second quarter but, at $0.68 per share, missed the consensus number by nearly a dime.

Now what: As for next quarter, General Cable held out hope that it might hit analysts' $0.76-per-share target but only if absolutely everything goes right. At the midpoint of guidance, we're more likely looking at a $0.69 quarter.

This suggests that Wall Street's forecast for 15% long-term growth at General Cable may prove overoptimistic and that the stock's 15 P/E ratio's overpriced. With no dividend to support the stock, and free cash flow looking pretty weak, I can't say as I'm convinced today's selloff is giving us a buying opportunity just yet. Here's hoping when the company finally gets around to releasing its cash flow statement, it will show us that things aren't as bad as they look.

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At the time thisarticle was published Fool contributorRich Smithdoes not own (or short) shares of General Cable. 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 adisclosure policy.

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