Why Control4 Shares Popped

Why Control4 Shares Popped

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 Control4 Corporation jumped more than 10% during intraday trading Friday, then closed up around 7% after the company posted solid third-quarter earnings results and forward guidance.

So what: Quarterly revenue rose 18% year over year, to $33.6 million, which translated to non-GAAP net income of $2.9 million, or $0.12 per share. For reference, analysts were looking for lower adjusted earnings of just $0.08 per share on sales of $33.64 million.

In addition, Control4 issued in-line fourth-quarter guidance, saying it expects Q4 sales between $35 million and $36.5 million, and non-GAAP net income per share between $0.10 and $0.15.

Now what: It's also worth noting that Control4 swung to a GAAP net profit this quarter of $1.7 million, or $0.07 per share, compared with a GAAP net loss of $4.1 million, or $1.73 during the same year-ago period.

Even still, be aware that the stock currently trades at a premium near 40 times next year's estimated earnings. As a result, while today's results were encouraging, I think investors would still be wise to approach the stock with caution.

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The article Why Control4 Shares Popped originally appeared on Fool.com.

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Originally published