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What: Shares of auto-parts maker Meritor were spinning out today, falling as much as 16% after reporting a disappointing quarter.
So what: Sales dropped 23% to $891 million, and the company posted an adjusted loss for the quarter at 11 cents per share. These figures were well below market expectations of a 4-cent EPS profit and sales of $940 million. Sales in both of its Commercial Truck & Industrial and Aftermarket & Trailer segments dropped, and the company took steps toward eliminating 200 jobs. CEO Chip McClure blamed "market conditions outside of North America" for the results, adding that reduced military spending also hurt profits.
Now what: Meritor dialed back its 2013 outlook as well, cutting revenue projections from $4 billion to $3.8 billion, and sees slightly negative free cash flow for the year. Management is holding EPS guidance of $0.25 to $0.35, but that is still below analyst expectations of 46 cents. With Ford predicting that the European market will get worse before it gets better, the recent bull run in auto stocks could be coming to a close. I'd keep an eye on industry leaders and on conditions across the Atlantic.
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The article Why Meritor Shares Tumbled originally appeared on Fool.com.
Jeremy Bowman has no position in any stocks mentioned, and neither does The Motley Fool. 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.