Why VCA Antech's Shares Spiked

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 animal health-care specialist VCA Antech (NAS: WOOF) powered ahead in early trading, gaining as much as 11% before settling down to a more modest gain.

So what: The jump in VCA's shares was triggered by a solid first-quarter earnings report. For the quarter, the company's total revenue climbed 15% from a year ago, to $410 million. Wall Street analysts were looking for $408 million in sales. Animal-hospital revenue, which makes up the bulk of VCA's business, notched 17% year-over-year growth.

On the bottom line, net income of $36.3 million was up 22% from the same quarter in 2011. Much of that profit jump, however, was due to a one-time gain from an acquisition. Even after backing out that gain, though, adjusted earnings per share of $0.34 still topped the $0.33 that analysts were looking for.

Now what: The quarter seems good enough to sustain a big post-earnings pop, yet shares slid back down to a sub-3% gain by the close of trading. The waning enthusiasm could have something to do with the fact that though revenue growth was impressive and gross profit grew even faster, a big jump in corporate spending took a big bite out of profits. While that increase may not be a continuing trend, it's nonetheless the type of thing that might give investors pause.

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