ResMed 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 ResMed (NYS: RMD) had a rough day today falling 14% after the company released earnings.

So what: Third-quarter revenue grew 12% to $314.8 million but fell well short of the $327.9 million in revenue analysts were expecting. On the bottom line, earnings fell 11% to $0.33 per share, $0.02 below estimates.

Now what: A weak dollar relative to the euro and Australian dollar was blamed for some of the shortfall, but it looks like expectations were much too high. Declining profit is never a good sign, and I would be cautious jumping on shares right now. The stock's price/earnings multiple of 19 times trailing earnings will look very expensive if the lower earnings trend continues.

Interested in more info on ResMed? 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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