Lufkin Industries 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: Shares of energy equipment supplier Lufkin Industries (NAS: LUFK) sank 14% on Wednesday after slashing its short-term outlook.
So what: Lufkin's third and fourth-quarter guidance were both well below analyst estimates, so it's no surprise that the stock is hitting a new 52-week low on the news. Management blamed material shortages, shipment delays, and the generally poor economy for the cut, giving investors plenty of reasons to finally give up and throw in the towel.
Now what: I'd look into this pullback as a possible entry point. Lufkin CEO John Glick's comment that that shaky global economy caused Lufkin to "be more cautious" about its guidance suggests that the chances of an earnings beat are much more attractive now. And with Lufkin shares down more than 50% over just the past six months and currently trading at a forward P/E discount to Schlumberger (NYS: SLB) and National Oilwell Varco (NYS: NOV) , the price seems reasonable, too.
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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool owns shares of Schlumberger and National Oilwell Varco. Motley Fool newsletter services have recommended buying shares of National Oilwell Varco. 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's disclosure policy always gets a perfect score.
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