Why Kimball International'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 manufacturer Kimball International fell 14% today after releasing earnings.

So what: During the fiscal second quarter, revenue fell 1% to $295 million and net income rose 31% to $4.2 million, or $0.11 per share. The increase in income is positive, but analysts were expecting $0.15 per share in earnings, so they missed the bar Wall Street set.

Now what: To me, the drop in revenue is far more concerning than the earnings numbers. Investors should be keeping a close eye on deteriorating performance in the manufacturing sector, and that's exactly what is happening at Kimball. I don't see a reason to pay 15 times forward earnings estimates after revenue fell and profits came in below expectations this quarter. I need to see a much more impressive earnings report to get excited about this stock.

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The article Why Kimball International's Shares Dropped 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 don't 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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