Why Datalink Corporation Shares Skyrocketed
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 Datalink Corporation jumped more than 31% Wednesday after the company increased its fourth-quarter revenue and earnings guidance.
So what: Fourth-quarter revenue is now expected to be $174 million, compared to the company's own guidance for sales between $160 million and $170 million. That should translate to adjusted earnings per share in the range of $0.33 to $0.37. By comparison, analysts were modeling earnings of just $0.25 per share on sales of $164.86 million.
Now what: Datalink isn't scheduled to officially release fourth-quarter earnings until February 20, but the timing of today's revision is notable considering management is set to present at tomorrow's 16th annual Needham Growth Conference. Investors can look forward to hearing more about exactly how Datalink is exceeding expectations then.
In the meantime, though shares are currently trading for around 32 times trailing earnings, they look much more attractive at 16 times next year's yet-to-be-increased estimates. As a result, and despite today's big jump, I think Datalink investors would be wise to think twice before taking all their chips off the table.
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The article Why Datalink Corporation Shares Skyrocketed originally appeared on Fool.com.
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