If I may add my own 2 cents here. For the 3rd qtr just released, APCC came in at the very low end of their previous guidance for revenues, earnings. They also forecast revenue growth going forward in the low to mid teens, where in the past few years they have been in the low to mid 20s. We are talking about a serious fundamental change which is causing growth expectations to be basically cut in half from where they were only one year ago. This change has occurred during the past 2 quarterly reports, hence the stock price performance lately.
As a company grows, one expects that revenue growth, as a percent of the total will slow. The major disappoint that I see is that revenue growth slowing from the high teens to mid 20s% to the single digit/low teens level is a dramatic drop.
Certainly, at $13/share, the stock's valuation is attractive even in the current environment. The problem is perception, IMO. When the company gave guidance last quarter they said to expect the revenue growth rate range to 10 to 20 percent. At 11%, this is just about the absolute bottom of their guidance. The difference between 10% and 20% revenue growth was over 30 million dollars!
The 5 year revenue growth rate for APCC had been in 28% range. The 3 year revenue growth rate was in the low 20s% and the one year growth rate has fallen to 11% in the latest quarter. Whether these numbers justify today's selloff is open for debate but in today's market environment, companies who miss estimates (or wind up at the low end of guidance when the guidance range is very wide) tend to get hammered, like we saw today!
Please let us know what your DD turns up. Also, please feel free to correct any mistakes or faulty assumptions I may have made in this post. TIA
MH |
