Why Koppers 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 Koppers Holdings were looking rusty today, falling as much as 12% after the company cut its outlook for the current quarter.

So what: The maker of carbon compounds and wood treatments said it now sees earnings per share of $0.66-$0.70 for the quarter, down from an earlier projection of $1. The analyst consensus, meanwhile, stood at $0.81. Similarly, it said it now expects a lower EPS than the $3.27 it had previously predicted, but didn't provide a specific figure. The company blamed the weak economy in Europe, saying the recession across the Atlantic had lowered prices for its products, and other surprise events, such as bad weather on the east coast, lowered demand for some items.

Now what: Koppers said it expects the second half to be stronger than the first, indicating that these problems are likely temporary. The European economy, for one, is bound to bounce back eventually. Given the cyclical nature of Koppers' business, today's drop is arguably a buying opportunity, as shares are now trading at a forward P/E of less than 10. To see if the stock can recover, just add the company to your Watchlist by clicking right here.

The article Why Koppers Shares Dropped originally appeared on Fool.com.

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