Checkpoint Systems Shares Popped, Then 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 electronic security specialist Checkpoint Systems (NYS: CKP) rose more than 11% in early trading on higher volume after adjusted third-quarter results beat estimates by $0.09 a share. The gains evaporated and turned into a 1.7% loss when management said it would expand its current restructuring plan.
So what: In a statement, CEO Rob van der Merwe cited "global economic uncertainty" and "unpredictable retailer behavior" in announcing plans to strip another $58 million from operating costs. Checkpoint's radio-frequency technology is typically sold to retailers for tracking merchandise.
Now what: Kudos to van der Merwe for taking action, but investors shouldn't applaud too much, or too loudly. Restructuring already cost $17 million in the current quarter. No one knows when those cuts -- or the cuts to come -- will allow Checkpoint to return to growth. What's your take? Would you buy shares of Checkpoint Systems at current prices? Please weigh in using the comments box below.
Interested in more information about Checkpoint Systems? Add it to yourwatchlist.
At the time this article was published Fool contributorTim Beyersis a member of theMotley Fool Rule Breakersstock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim'sportfolio holdingsandFoolish writings, or connect with him onGoogle+or Twitter, where he goes by@milehighfool. You can also get his insightsdelivered directly to your RSS reader.Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.