EnerSys 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 industrial battery maker EnerSys (NYS: ENS) sank 13% on Thursday after its first-quarter results and guidance disappointed Wall Street.

So what: While the company's quarterly profit surged 46%, a slowdown in the rate of growth is what has Mr. Market worried. In addition to coming in a penny shy of analyst's quarterly EPS estimates, management also issued disappointing second-quarter guidance, forcing investors to seriously question their growth expectations.

Now what: Expect the short-term pressure to continue. Due to higher commodity prices and costs, as well as the continued turbulence in the global economy, EnerSys now sees adjusted second-quarter earnings of just $0.53 to $0.57 per share, versus the average analyst consensus of $0.71 per share. Of course, with the shares now down more than 40% over the past month alone and sporting a forward P/E around 6, much of the downside risk could already be priced in.

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At the time thisarticle was published Fool contributorBrian Pacamparaowns no position in any of the companies 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 Fool'sdisclosure policyalways gets a perfect score.

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