Why Lurkin Industries' Shares Dropped

Updated

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 energy supplier Lufkin Industries (NAS: LUFK) fell 10% today, after issuing weak guidance in it earnings report.

So what: In the third quarter, revenue rose 47%, to $340.3 million, and earnings rose 82%, to $26.3 million, or $0.78 per share. The results were slightly better than expected, but the fourth quarter is going to be weaker than expected. The company cut its full-year earnings estimate to $2.81 to $2.91 per share, which is below a previous estimate of $3.00 to $3.20, and below analyst expectations of $3.00 per share.


Now what: The company said that prices have fallen in recent weeks, and customers aren't spending as much as expected on capital goods going into 2013. The lower spend rate is something to watch, especially with energy prices as low as they are. Looking forward, the company isn't terribly overvalued at 12 times forward earnings, even if estimates are lowered, but I'd prefer to see more certainty before buying in.

Interested in more info on Lufkin Industries? Add it to your watchlist by clicking here.

The article Why Lurkin Industries' Shares Dropped originally appeared on Fool.com.

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