Why Tronox's Shares Dropped
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 titanium dioxide maker Tronox (NYS: TROX) fell as much as 25% today, after the company released earnings.
So what: In the third quarter, revenue rose 5%, to $487.3 million, and income from continuing operations was $25.6 million, or $0.21 per share. But analysts had expected revenue of $532.1 million and earnings of $0.45 per share, so these results were a huge disappointment to investors.
Now what: An earnings miss is never good, but this was a huge miss on both the top and bottom line. Management said that it was still purchasing feedstock from prior contracts, and cost of goods sold will fall when the company is operating on a more vertically integrated basis. To make matters worse, the company bought back 12.6 million shares at an average price of $25.85, about $10 above today's price.
Earnings have swung wildly in recent quarters and, while I have hope for the company's value in the future, I simply can't be a buyer after such a disappointing profit.
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The article Why Tronox's Shares Dropped originally appeared on Fool.com.Fool contributor Travis Hoium has no positions in the stocks mentioned above. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw. 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.