Why Armstrong World Industries' 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 home-products maker Armstrong World Industries (NYS: AWI) fell 15% after the company released earnings.

So what: Second-quarter revenue fell 5% to $709.0 million, falling well below estimates of $765.4 million from Wall Street. The company also said that earnings per share were $0.71, below the $0.78 bar analysts had set. To make matters worse, management lowered full-year guidance for both earnings and revenue.

Now what: This was a nightmare for investors -- misses on earnings, revenue, and guidance. The company is still profitable, but with a 19 trailing P/E ratio and revenue falling I'm not sure that alone is enough to hold up shares. I'm bailing due to this report today and wouldn't jump back in until earnings show significant improvement.

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The article Why Armstrong World Industries' Shares Plunged originally appeared on Fool.com.

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.

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