Why Hub Group's Shares Dropped 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 Hub Group dropped as much as 11% in early trading today, after releasing earnings and being downgraded by an analyst.

So what: During the fourth quarter, the company reported a 5% increase in revenue, to $801 million, and a $0.05 jump in earnings, to $0.51 per share. The bottom line beat estimates by a penny, but top-line growth was disappointing compared to what Wall Street expected. As a result, Stifel Nicolaus came out and downgraded the stock today from a buy rating to hold.

Now what: It was a strange day for those who watch Hub Group. Shares traded down sharply in the opening minutes of trading, as a few large orders cleared the market. But shares soon recovered, and climbed most of the day to near a flat finish. I think that's appropriate given earnings results were mixed, and the fact that we don't take analyst downgrades too seriously at The Motley Fool. I don't think there should be a big change in your investment thesis today, but I would keep an eye on the revenue line going forward, because that's what the company needs to improve if it's going to live up to its 21 P/E ratio.

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The article Why Hub Group's Shares Dropped Temporarily originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. 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 position in any of the stocks mentioned. 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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