Why Nam Tai Shares Shorted Out

Why Nam Tai Shares Shorted Out

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 Nam Tai Electronics have plunged by 15% today after the company released second-quarter financials that contained a far larger loss per share than was expected.

So what: The lone analyst covering the Chinese electronics manufacturer had expected it to report $145.2 million in revenue and earnings of $0.05 per share. Nam Tai trounced the top-line estimate with $167.9 million in second-quarter revenue, a 64% year-over-year increase, but it reported a big loss of $0.71 per share. That totaled $31.9 million in actual losses, and the company noted in its report that it recorded $41 million in losses from discontinued businesses. A $9 million net profit from continuing operations would have been equivalent to $0.20 in EPS, which is well ahead of expectations.

Now what: It's always tough to analogize American investing standards to Chinese companies listed on American markets. They rarely perform as you'd expect a similar U.S. company to perform, simply because many investors remain uncertain of the veracity of their financials. However, Nam Tai is quite a high-dividend stock now, with a yield over 8% following the plunge. It might be worth a flier, provided you can be confident that the company won't go belly up.

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The article Why Nam Tai Shares Shorted Out originally appeared on Fool.com.

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