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What: Shares of electric motor manufacturer Regal Beloit plummeted 19% today after its quarterly results and guidance missed Wall Street expectations.
So what: The stock has soared over the past year on improving profitability, but today's first-quarter results -- EPS fell 6% while revenue slipped 4% -- coupled with downbeat guidance is forcing Mr. Market to sober up. While the company managed to maintain operating margins, weaker-than-expected demand in the U.S. commercial and industrial market is weighing on revenue, triggering plenty of nervousness about its operating environment going forward.
Now what: Management now sees second-quarter adjusted EPS of $1.19-$1.27, well below Wall Street's view of $1.61. "As we look to the second quarter, sluggish demand in our North American commercial and industrial markets is impacting both our electrical and mechanical segments," Chairman and CEO Mark Glieve cautioned. "To a lesser extent, we are anticipating unfavorable market dynamics in the HVAC channel." Of course, with the stock now off about 30% from its 52-week highs and trading at a P/E in the low teens, those headwinds might finally be baked into the valuation.
The article Why Regal Beloit Shares Got Crushed originally appeared on Fool.com.
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