What Happened?
Shares of building products company Quanex (NYSE: NX) fell 10.3% in the afternoon session after it continued a slide from the previous session as the company reported second-quarter results that included a significant miss on profit and a full-year revenue forecast that fell short of Wall Street's expectations. The drop extends a 13.4% decline from Friday, when the building products company announced its quarterly results. Although revenue surpassed expectations, its non-GAAP profit of $0.69 per share came in 18.1% below analysts' consensus estimates.
Adding to investor concerns, Quanex's full-year revenue guidance of $1.82 billion at the midpoint was 1.6% below what analysts had anticipated. The company disclosed that operational challenges in its Hardware Solutions segment negatively impacted EBITDA by almost $5 million during the quarter. Management noted that it has already made leadership changes and is dedicating more resources to resolve these issues.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Quanex? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Quanex’s shares are very volatile and have had 21 moves greater than 5% over the last year. But moves this big are rare even for Quanex and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 3 days ago when the stock dropped 13.4% on the news that the company reported second-quarter results that included a significant miss on profit and a full-year revenue forecast that fell short of Wall Street's expectations. Although the company surpassed Wall Street's revenue expectations for the second quarter, its non-GAAP profit of $0.69 per share came in 18.1% below analysts' consensus estimates. Adding to investor concerns, Quanex's full-year revenue guidance of $1.82 billion at the midpoint was 1.6% below what analysts had anticipated. The combination of a substantial earnings miss and a disappointing forward-looking forecast appears to be the primary driver behind the significant drop in the company's stock price.
Quanex is down 29.9% since the beginning of the year, and at $16.48 per share, it is trading 47.7% below its 52-week high of $31.51 from November 2024. Investors who bought $1,000 worth of Quanex’s shares 5 years ago would now be looking at an investment worth $900.55.
Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.
