Why Builders FirstSource Shares Plunged Temporarily

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 building product supplier Builders FirstSource (NAS: BLDR) fell 13% near the open of trading after reporting earnings. Shares quickly gained most of that back and are down only 1% near the end of trading.

So what: The stock dropped because a third-quarter loss per share of $0.07 was a penny worse than estimates. But revenue grew 34.3% to $291.8 million, which was better than expected, and investors quickly righted the ship.

Now what: The company's strong growth is intriguing but the consistent losses are enough to keep me away from the stock. This is the second straight quarter the company's loss was larger than expected and there doesn't appear to be a profit on the horizon. The initial 13% drop may have been an overreaction to a mixed earnings report but I think the stock will move lower unless the company can turn a profit.

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The article Why Builders FirstSource Shares Plunged Temporarily originally appeared on Fool.com.

Fool contributor Travis Hoium has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. 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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