Why Gentherm Stock Tumbled by 23% This Week
On Tuesday, thermal products specialist Gentherm (NASDAQ: THRM) released quarterly results that left investors ice-cold. They traded out of the stock to the point where it lost 23% of its value across the week, according to data compiled by S&P Global Market Intelligence.
Gentherm notched a double miss in its third quarter
In its third quarter, Gentherm's revenue grew by 10% to slightly over $366 million. Despite the double-digit improvement, that tally fell quite some distance short of the average analyst estimate of $382 million.
The company also didn't reach the collective-pundit forecast for profitability, although the gap was narrower. Its earnings release revealed that it netted a non-GAAP (adjusted) profit of $21.3 million ($0.64 per share). Not only was that below the year-ago profit of $23.4 million; it was underneath the consensus-analyst projection of $0.68 per share.
Management waxed cautiously optimistic in the release. CEO Phil Eyler was quoted as saying that:
While the automotive production environment remains challenging including the UAW strike, our relentless focus on strong operational execution, innovation and cash flow generation along with our record performance on new business awards position us well to continue to drive shareholder value over the long term.
The high end of 2023 guidance was lowered
Compounding the double miss, Gentherm also lowered the high end of its guidance for the entirety of 2023. It now believes its revenue will total $1.45 billion to $1.47 billion; before, it was modeling $1.45 billion to $1.55 billion.
Meanwhile, the adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin should come in at 11.5% to 12.5%. The previous guidance called for 11.5% to 13.5%.
The company did not provide any net-income forecasts.
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Eric Volkman 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.
