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 rapid prototype maker Proto Labs (NYS: PRLB) fell as much as 11% today after the company reported earnings.

So what: The bottom line was actually better than expected, with earnings per share of $0.23 beating estimates by $0.03. But the top line is concerning investors, and revenue growth of 24.5% to $30 million was just short of estimates.

Now what: The stock is trading at 26 times forward earnings, so any miss on the top line puts the company's growth outlook into question. But I don't think the revenue miss was enough to be worried about and the growth rate was very impressive. Proto Labs provides a vital service to manufacturers looking for fast, low-volume production, and I think the company's prospects are bright. I see today's dip as more of a discount than a warning and would be a buyer on the weakness.

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

The article Why Proto Labs' Shares Plunged originally appeared on Fool.com.

Fool contributorTravis Hoiumdoes not have a position in any company mentioned. You can follow Travis on Twitter at@FlushDrawFool, check out hispersonal stock holdingsor follow his CAPS picks atTMFFlushDraw.Motley Fool newsletter serviceshave recommended buying shares of Proto Labs. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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

Originally published