Noah Holdings 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: With business in China booming, you might think it's a great place to do business selling wealth-management services. You might think that, and you'd be right ... but that helped Noah Holdings (NAS: NOAH) shareholders not at all today. The shares are down 13%.

So what: Noah reported earnings after the close of trading last night. Revenues tripled. (Yes, literally.) Income from operations was up 250%, and the company earned $0.16 per American Depository Receipt -- a 300% increase.

Now what: The problem, it seems, is no one knows where we're going from here. Noah stock sells for a steep 29 times earnings today. That would be insanely cheap if Noah planned to keep on growing its profits at 300% per year, but with no analysts following the stock, and no one posting earnings estimates for it, investors are pretty much left to fend for themselves, guessing how much longer Noah can keep this up.

My best guess: They'll do it a whole lot longer than most people think, and the folks who sold on this week's good news will be kicking themselves for it a few quarters from now.

How long can Noah keep the boat floating?Add the stock to your Fool Watchlistand find out.

At the time thisarticle was published Fool contributorRich Smithdoes not own (or short) shares of Noah Holdings. We Fools don't 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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