Why VeriFone Shares Plummeted
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 electronic-payment specialist VeriFone Systems (NYS: PAY) plunged 13% on Friday after its current-quarter guidance came in below Wall Street estimates.
So what: VeriFone's second-quarter results managed to top expectations, but a disappointing outlook for the third quarter is triggering concerns over its profitability going forward. Management cited foreign-exchange movements as the reason for the lackluster guidance, suggesting that its results are far more vulnerable to currency fluctuations than investors thought.
Now what: Management now sees third-quarter adjusted EPS of $0.68 to $0.70 on revenue of $495 million to $500 million -- versus Wall Street's expectations of $0.70 and $502.2 million -- but also maintained its full-year forecast. "We remain confident in our outlook for the year," CEO Douglas Bergeron reassured investors. "VeriFone is continuing to prove that widespread incumbency combined with market-leading innovation is a winning formula for the payments marketplace." But while today's plunge might offer a decent trading opportunity, VeriFone's still-heavy debt load and exposure to volatile foreign-exchange fluctuations make it a questionable long-term pick.
Interested in more info on VeriFone? Add it to your watchlist.
At the time this article was published Fool contributorBrian Pacamparaowns no position in any of the companies mentioned. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.