Why Proto Labs Shares Plunged

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 manufacturer Proto Labs (NYS: PRLB) fell as much as 34% today after the company released earnings.

So what: Revenue increased 34% from a year ago to $30 million and net income was $0.24 per share after adding back stock-based compensation. Both results easily beat analysts' expectations, so the move south is a bit mysterious.

Now what: The company doesn't give guidance, so that can't be what investors were focused on, and obviously results weren't disappointing. Sometimes investors can have overexaggerated expectations of new companies on the public market, and that's what it looks like to me today. Shares aren't terribly cheap at 24 times forward earnings estimates, but I would look at the sell-off today as more of an opportunity than a reason to panic-sell. The company is performing well and provides a service to companies that they can't easily fill themselves. I think the sell-off is overdone and the stock can move higher from here.

Interested in more info on Proto Labs? Add it to your watchlist byclicking here.

At the time thisarticle was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.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 Motley Fool has a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.