Why Super Micro Computer Shares Plunged
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 Super Micro Computer fell by more than 10% during intraday trading Wednesday, after the company reported mixed quarterly earnings results. However, shares recovered some of their early morning losses to close down around 5.5%.
So what: Quarterly net sales rose 14.2% year over year to $309 million, which translated to adjusted earnings of $0.22 per diluted share. For reference, analysts on average were expecting the company to achieve those $0.22 per share in non-GAAP earnings on lower revenue of $307.23 million.
Going forward, Super Micro also said it expects fiscal second-quarter net sales of $320 million to $350 million, with non-GAAP earnings of $0.25 to $0.31 per diluted share. Both ranges came in well above analysts' consensus estimates.
Now what: All told, the quarter certainly wasn't all that bad, especially considering management also pointed out that it's currently sitting in a "transition period ahead of new technology."
Still, I suppose I can't blame investors for wanting to take some profits off the table -- even after today's pullback, shares still trade around 28 times last year's earnings and have risen by around 35% over the past six months alone. That said, the stock is also trading for only 9.5 times next year's estimated earnings, so long-term investors who don't mind holding could still be handsomely rewarded for their patience.
Three more stocks you can buy and hold forever
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love.
The article Why Super Micro Computer Shares Plunged originally appeared on Fool.com.Fool contributor Steve Symington and The Motley Fool have no position in any of the stocks mentioned. 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.