Why ShoreTel Shares Surged
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 ShoreTel have ended the day with a 7% gain after starting the morning with a 14% pop. Investors have moderated their enthusiasm over ShoreTel's double beat on yesterday's fiscal fourth-quarter earnings report, as they digest the company's forward guidance.
So what: ShoreTel's revenue came in at $85.6 million for the fourth quarter, 9% higher year over year, and also a bit ahead of the $83 million Wall Street consensus. The company's earnings of $0.06 per share smashed through the Street's expectation of just $0.02 in EPS. Looking forward, the company's first-quarter guidance now puts revenue in the $77 million to $83 million range, which hits Wall Street's $79.8 million fairly near the midpoint. ShoreTel CFO Mike Healy did note that the company's first-quarter gross margins will be about 61% to 62%, and with operating expenses in the $49 million to $52 million range, it looks as though the company may report a slight net loss for the quarter.
Now what: Analysts were expecting a $0.01 loss per share for the upcoming quarter, and there's still some room for ShoreTel to grow past that weak spot. However, the company's year-ago first-quarter revenue was about 7% lower than the midpoint of its present guidance. That's a slight dip from this quarter's growth rate, but it's not falling into worrisome territory. After today's pop, it might be best to do a deeper investigation before you decide to follow the crowd into this small-cap stock.
Want more news and updates? Add ShoreTel to your Watchlist now.
The government has been on a spending spree. But many investors are missing the forest for the trees. You see, two small cap companies with long-term government deals are reaping the rewards... and securing some monstrous, guaranteed profits, while at the same time limiting any risk exposure they have. We outline how they're taking advantage in our special, 100% FREE report, Too Small to Fail: 2 Small Caps the Government Won't Let Go Broke. Just click here to get instant access to the names of both companies, and start reaping the profits right alongside them!
The article Why ShoreTel Shares Surged originally appeared on Fool.com.
Fool contributor Alex Planes 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.
