Why Aceto Corporation's Shares Plunged 17% Today

What happened

Shares of Aceto Corporation (NASDAQ: ACET) tumbled as much as 26.8% in trading Friday after the company reported fiscal second-quarter earnings. At 10:40 a.m. EST, the stock is bouncing near its low, down 26.1% on the day.

So what

Quarterly revenue was up 36.4% to $171.2 million but net loss ballooned from $0.6 million a year ago to $13.9 million, or $0.39 per share. Adjusting for a tax loss from the December tax bill, adjusted net income was up 4.7% to $7.6 million, or $0.22 per share.

Image source: Getty Images.

Revenue was in line with analyst estimates but earnings were a penny short of their forecast. Even more concerning is that full-year guidance of $1.00 to $1.05 per share in earnings dropped below analyst estimates of $1.07.

Now what

Management said pricing pressure on generic products would hinder the bottom line and don't see that pressure slowing later in 2018. That's what investors were worried about in trading today and it's a concern for long-term profitability. But with the decline in shares, they trade at just eight times 2018 guidance, which is a value I think investors should jump on today.

10 stocks we like better than Aceto

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Aceto wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of January 2, 2018

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Tags