Valassis Communications Shares Popped: 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 media and marketing services company Valassis Communications (NYS: VCI) spiked 12% following the company's fourth-quarter earnings results.

So what: Today's move is rather confusing because overall results appear mixed. The company reported a profit of $0.76 on revenue of $595.3 million. These results place it $0.04 shy of consensus figures for profit, but $5 million ahead of Wall Street's expectation for revenue. Against the year-ago period, net earnings popped by 38% but revenue fell by 6%.

Now what: Thanks to accounting rules that read like stereo operation instructions, I also feel the company's diluted cash EPS figure of $1.35 could be playing with traders' heartstrings -- it makes it look like the company crushed estimates. The fact is, this quarter was more of the same for Valassis. Its CEO, Alan Schultz, postulated that most of its weakness in 2011 was "derived from consumer goods companies spending less on running coupons." Valassis' business is strongly tied to consumer confidence, and until consumers feel better about things, its business is probably going to grow very modestly at best (if at all).

Craving more input? Start by adding Valassis Communications to your free and personalized watchlist so you can keep up on the latest news with the company.

At the time thisarticle was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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