Why Fuel Systems Solutions Shares Jumped

Why Fuel Systems Solutions Shares Jumped

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 Fuel Systems Solutions were getting pumped up today, climbing as much as 23% after a top-notch earnings report.

So what: The maker of fuel delivery systems said that earnings per share came in at $0.13, well ahead of analyst estimates at $0.08, while revenues inched up 1.9% to $111.1 million, beating the consensus at $106.5 million. The better-than-expected performance was not without obstacles as CEO Mariano Costamagna noted that sales of aftermarket kits were lower and felt pressure in Europe from the sluggish economy and rising competition. Fuel Systems also reaffirmed its sales guidance for the year at $400 million-$420 million, in line with estimates.

Now what: Despite beating expectations, the company's EPS was still down sharply from a year ago when it hit $0.36, as gross profit actually fell in the quarter even with the increase in sales. Analysts are expecting slim profits for the rest of the year, and slow growth next year. An earnings beat is always nice, but it seems like Fuel Systems has more structural problems to get over first.

Natural gas has been a key component of Fuel Systems' business, and the shale boom continues to change the way we use natural gas. But there's one company that's perfectly positioned to benefit from this transformation, and forward-thinking energy players like GE and Ford have already plowed sizable amounts of research capital into this little-known stock... because they know it holds the key to the explosive profit power of the coming "no choice fuel revolution". Luckily, there's still time to get on board. All the details are inside an exclusive report from The Motley Fool. Click here for the full story!

The article Why Fuel Systems Solutions Shares Jumped originally appeared on Fool.com.

Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.