Home Inns & Hotels 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 Chinese hotel chain Home Inns & Hotels Management (NAS: HMIN) sank as low as 10% on Friday after the company's quarterly results disappointed Wall Street.
So what: The stock has been on a nice run so far in 2012, but today's big fourth-quarter miss -- EPS of just $0.12 versus the consensus of $0.28 -- is forcing Mr. Market to sober up a bit. Slowing economic growth in China continues to weigh on occupancy rates and revenue per room, giving investors plenty of reason to be concerned.
Now what: Looking ahead, management sees full-year 2012 revenue of $923.9 million, versus the average analyst estimate of $853 million. "Although there are few uncertainties in the overall economy in China in 2012," said CEO David Sun in the conference call, "we are confident that our strong business fundamentals will see us through to continue health[y] growth in the long run." Given its still-lofty P/E, however, Home Inns' risks don't seem worth taking on.
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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. 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.