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What: Shares of A. Schulman were getting squashed today, falling as much as 14% after the plastics-maker turned in a subpar quarter.
So what: The automotive-materials supplier posted an adjusted earnings per share of $0.27, well below the analyst consensus at $0.40, and revenue was slightly off as well. Management blamed the shortfall on continued weakness in Europe, noting that it was their first quarter in "quite some time where our America and Asia segments could not offset softness in Europe." CEO Joseph Gingo also said the company plans to cut costs at the SG&A level to cope with the disappointing economic environment. Shulman also lowered its EPS forecast for the fiscal year ending in August to $2.08 to $2.13 a share. Analysts had projected $2.18.
Now what:Coming on the cusp of earnings season, Schulman's report is a bit of warning shot for the auto industry as a whole. The slowdown in Europe has dampened industry performance for the past several quarters, and the sector still seems to be waiting for the upswing. Some of the larger automakers have predicted Europe will begin to come back in the second half of the year, but that remains to be seen. With continued restructuring activities planned and the global economy still slow to wake up, Schulman looks like a risky bet right now.
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The article Why A. Schulman Shares Tumbled originally appeared on Fool.com.
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