Meritor Shares Got Crushed: 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 truck parts manufacturer Meritor (NYS: MTOR) plummeted 17% on Tuesday after its full-year guidance disappointed Wall Street.

So what: Meritor's fourth-quarter earnings blew out expectations, but a miss on its 2012 revenue guidance -- $4.8 billion versus the consensus of $5.3 billion -- is forcing analysts to lower their growth expectations yet again. In fact, the shares are flirting with 52-week lows on the news and are down a whopping 68% in 2011.

Now what: I'd look into this plunge as a possible buying opportunity. "We remain focused on our 2012 priorities and key initiatives," said Chairman and CEO Chip McClure. "We will keep driving for sustainable and profitable growth, collaboration with customers and suppliers, strategic investments, new product introductions and cost management." With Meritor trading at a clear forward P/E discount to rivals like Dana Holding (NYS: DAN) and Cummins (NYS: CMI) , buying into that optimism might not be such a bad idea.

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At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Cummins. 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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