Why KAR Auction Services 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 KAR Auction Services were getting junked today, falling as much as 10%, after it missed earnings estimates in its quarterly report.

So what: The vehicle-auction specialist said adjusted EPS improved 29%, to $0.27; however, analysts were expecting $0.33 a share. Revenue was up 3% from a year ago, to $493.7 million. KAR also noted that, though Superstorm Sandy did not damage any of its property or vehicles, it did delay certain auction activities, and prevented customers from attending some, as well. EPS Guidance for 2013 at $1.13-$1.18 was essentially in line with analyst estimates of $1.18.

Now what: KAR shares bottomed out early in the session, but recovered to finish the day down only 3%. Vehicle demand appears to be growing with the average car age in the U.S. now at 11, which should favor KAR in the coming years. Today's initial drop shouldn't be cause for concern.

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The article Why KAR Auction Services Shares Dropped originally appeared on Fool.com.

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