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 electronics distributor Ingram Micro (NYS: IM) sank 10% on Tuesday after forecasting lower-than-expected third-quarter earnings.
So what: The downside guidance was so wide -- Ingram now sees adjusted earnings of $0.32-$0.34 per share versus the consensus of $0.41 per share -- that Wall Street is being forced to seriously adjust its growth expectations. Management cited a drop in demand in both Europe and Australia for the profit warning, suggesting that Ingram might be much more sensitive to the recent global turbulence than Mr. Market had previously thought.
Now what: I'd look into this sell-off as a possible buying opportunity. While Europe and Australia are certainly areas of concern, Ingram CEO Greg Spierkel reassured investors that "demand in our key customer segment, which serves small and medium businesses, remained relatively solid in most parts of the world." And with Ingram trading at a price-to-cash flow of just 8, representing a discount to rivals Arrow Electronics (NYS: ARW) and SYNNEX (NYS: SNX) , the downside seems protected.
Interested in more info onIngram Micro?Add it to your watchlist.
At the time thisarticle was published Fool contributor Brian Pacampara owns 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's disclosure policy always gets a perfect score.
Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.