G&K Services 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 branded uniform specialist G&K Services (NAS: GKSR) took a beating early today, falling as much as 11% in intraday trading before recovering to a lesser loss.
So what: G&K announced its fiscal first-quarter earnings today, and I have to say it looks like Mr. Market is reacting poorly. For the quarter, G&K reported earnings per share of $0.45 on total revenue of $209.7 million. That was above Wall Street's expectation of $208.4 million in revenue and $0.43 in per-share profit.
Even better, the company maintained its full-year revenue outlook but boosted its profit view, taking its expected earnings-per-share range to $1.80 to $2.05. The midpoint of that range is above current analyst expectations.
So why are shares down today? That's the "wisdom" of the market for you. Good-looking numbers or not, it's tough for almost any stock to be up today in the face of the broad concerns about Greece and the eurozone.
Now what: While G&K's quarter was better than expected, investors aren't completely crazy to be concerned about what's going on in the broader economy. As a business services company, G&K will do best when businesses are doing best, and that will happen when the economy is clicking along. While I think the trading action today is pretty silly, G&K investors will want to keep an eye on the developments in the broader economy.
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