Why Integrated Silicon Solution Shares Dropped
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 Integrated Silicon Solution plunged more than 10% during intraday trading Tuesday, after the company announced disappointing fiscal fourth-quarter results.
So what: Quarterly revenue rose 8.1% to $78.4 million, which translated to adjusted earnings of $0.20 per diluted share. Analysts, however, were looking for significantly higher adjusted earnings of $0.26 per share on sales of $80.16 million.
In addition, the company forecast next quarter's revenue to be in the range of $76 million to $82 million, with non-GAAP earnings between $0.17 and $0.21 per share. Once again, that's well below analysts' expectations, which called for forward quarterly revenue and earnings per share of $82.62 million and $0.27, respectively.
Now what: Today's pullback looks like a fairly cut-and-dried case, but it's also worth noting shares currently look relatively cheap trading at around 9 times next year's estimated earnings. As it stands, the company is also enjoying relatively healthy growth with its automotive business in particular, which represented nearly half its revenue during the fiscal year.
Of course, investors should also remember that sort of overexposure to a single sector is risky in and of itself. For now, then, while I wouldn't buy the stock at today's levels, I think investors would do well to at least add it to their watchlists.
You can own these businesses for the rest of your life
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 Integrated Silicon Solution Shares Dropped 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.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.