Exponent Shares Plunged Temporarily: What You Need to Know
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 engineering and scientific consulting firm Exponent (NAS: EXPO) dipped by 11% earlier in the trading session, but have gained nearly all of it back following its fourth-quarter earnings report.
So what: Exponent's fourth-quarter results were actually pretty solid -- revenue grew by 11% and net income jumped 25%. Both of these figures easily flew past Wall Street's estimates. The reason for the drop this morning relates to its cautious statements regarding growth in 2012. The larger projects Exponent benefited from in 2011 simply won't be there in 2012 and, as such, Exponent is expecting EBITDA to decline slightly.
Now what: Wall Street had been factoring in 7% sales growth in 2012, so Exponent is probably going to come in short of those figures. Despite a balance sheet ripe with cash and no debt, Exponent doesn't pay its shareholders any dividend. That, along with the fact that Exponent isn't all that cheap -- 3.8 times book and 20 times forward earnings with a 2012 growth rate in the midsingle digits -- makes this an easy stock to pass on.
Craving more input? Start by adding Exponent to your free and personalized watchlist so you can keep up with the latest news on the company.
At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.
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