Thursday, November 4, 2010

Bookkeeping: Selling Other Half of Polypore International (PPO) & Closing Position as Stock Obliterating Post Earnings

I am confused by the reaction to Polypore International's (PPO) earnings - the stock 'met' estimates, yet is being obliterated this morning.  It was "only" down 8% in after hours yesterday but has opened down nearly 20%!!.... as I type this has improved to about -12% but still very harsh considering the report was fine.   While I often kick myself for not playing the "earnings game", and sometimes missing out on huge gains post report, this also keeps me out of substantial losses.  To that end I sold half the position Tuesday to lock in a gain approaching 40%.   I am still going to have a gain on the remainder of the position, but obviously a materially smaller one.

Technically, the stock (as I type) has bounced back over the 50 day moving average but that could be one of the longer red candles I've seen in a while.   Since I've bought a slew of other stocks today I can let this remaining 0.8% exposure go and then re-assess after the binary knee jerk reaction is over.  Normally stocks don't bounce back from this sort of technical damage anytime soon but in this market, who knows.  There are too many other stocks with zero issues on their chart to waste the near term here.  If PPO can get back over $34 in the very near term, that would be bullish.  Most likely I'll be back in the future when things calm down.

I like this company for the lithium battery exposure (which is about 1/5th of sales).  That division did great; in fact the company is doing a $32 million expansion in that business line.

  • Lithium battery separator sales were $34.1 million, an increase of $10.8 million, or 46%. The increase reflects strong demand in consumer electronics, continued application proliferation, and growing demand in Electric Drive Vehicles ("EDVs"). Year-to-date sales were $97.1 million, an increase of $35.9 million, or 59%.
  • Polypore will invest $32.0 million in an additional capacity expansion at its lithium battery separator production facility in Charlotte, North Carolina, to meet the growing demand in EDVs. This new investment is expected to come online in approximately one year and is in addition to the previously announced EDV-targeted expansions already underway in North Carolina.

The rest of the business is relatively ho hum, so maybe all the momo traders who came into the stock expecting a "Netflix" report did not realize that.  That's the only explanation I have for the reaction to what was a decent quarter.

(full report here)

Via AP

  • Polypore International Inc., which develops membranes used in filtration processes, said Wednesday its profit nearly doubled in the third quarter on higher sales.
  • The company reported net income of $12.4 million, or 27 cents a share, for the three months ended Oct. 2. That compares with net income of $6.5 million, or 14 cents a share, in the comparable quarter last year.
  • Revenue increased 10 percent to $151.7 million from $137.7 million a year earlier.
  • The results were in line with analysts' consensus forecasts of a profit of 27 cents a share on revenue of $150.3 million, according to Thomson Reuters.
  • The company said sales for its energy storage segment rose 13 percent from a year earlier to $113.3 million. Sales for its separations media division, meanwhile, inched up 2 percent to $38.4 million.

No position

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