ripvanwinkle
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All that is necessary for evil to succeed is that good men do nothing - Edmund Burke 1729 -1797
Joined: Jan 9, 2011 22:36:42 GMT -5
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Post by ripvanwinkle on Feb 20, 2016 12:53:03 GMT -5
I'm confused. Let's say a 40yr old company ABC Inc makes widgets. They're the best widgets in the country. Their market share is 80% of the widgets used. Over the years they consistently meet or exceed their sales goals. Pay nice dividends. Last year they beat the experts yearly estimate and paid $1.10 per share. $.15 more than expected. You'd think this was good news. Why then does the stock price go down rather than up after the announcement? .
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ModE98
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Post by ModE98 on Feb 20, 2016 15:14:28 GMT -5
Does not make sense to me either. But, someone knows the reason, something is not quite right. (Of course, if the general markets are in retreat, guessing this may be the reason. If the company is that good, things will turn around again with e positive market.)
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ripvanwinkle
Well-Known Member
All that is necessary for evil to succeed is that good men do nothing - Edmund Burke 1729 -1797
Joined: Jan 9, 2011 22:36:42 GMT -5
Posts: 1,327
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Post by ripvanwinkle on Feb 23, 2016 19:52:00 GMT -5
I'm sure someone out there has an answer. Hope they chime in.
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Ombud
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Post by Ombud on Feb 23, 2016 21:23:34 GMT -5
Did they announce that earnings would drop or slow in the next year? How's their overall sector?
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tyfighter3
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Post by tyfighter3 on Feb 24, 2016 13:13:28 GMT -5
Maybe the good news has already been priced in the stock, then you would be getting some profit taking going on. Maybe the price to earnings have gotten out of line that would bring the stock price back into line. Maybe we are just in a Bear market for the time being. Who knows without the Stocks Name. JMO
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The Virginian
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"Formal education makes you a living, self education makes you a fortune."
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Post by The Virginian on Feb 24, 2016 15:59:12 GMT -5
Because their forward outlook is important. Investors know if the company lowers guidance for the year ahead chances are the stock will not do well so they sell out of their positions in anticipation of this. If you are long term and dripping it shouldn't matter as you will just be able to buy more shares dripping than with the normal price, or if are in it for the income as long as you expect the dividend to keep rolling in it shouldn't matter.
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