Solutia Shares Dropped: What You Need to Know

Travis Hoium, The Motley Fool

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 specialty chemicals maker Solutia (NYS: SOA) dropped as much as 11% in early trading today after management lowered its 2011 forecast.

So what: Slower-than-expected demand led management to lower expectations for the second half of 2011. For the full year, management now expects adjusted earnings per share to be between $1.95 and $2.05, from a previous expectation of $2.10 to $2.25.

Now what: Despite the lower guidance, Solutia is still making good money. The company currently trades at just eight times the bottom end of expectations for 2011. Shares have risen since reaching lows in early trading, but I think they still present a good value for investors.

Interested in more info on Solutia? Add it to your watchlist byclicking here.

At the time thisarticle 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.

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