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What's happening:Shares of 51job were down 12.3% as of 11:45 a.m. Tuesday after the Chinese human resources services company announced mixed first-quarter results and cautious guidance.
Quarterly revenue climbed 4.8% year over year to $73.9 million, which translated to 3% growth in adjusted net income to $22.9 million, or $0.39 per diluted share. The latter figure was bolstered in part by 51job's decision to repurchase 54,141 American depositary shares for $1.7 million during the quarter. Analysts, on average, were anticipating adjusted earnings of just $0.36 per share, but on higher sales of $76.55 million.
For the current quarter, 51job expects revenue of $77.4 million to $80.7 million, and adjusted earnings of $0.36 to $0.40 per diluted share. Wall Street was more optimistic on both fronts, with the consensus calling for second-quarter revenue of $84.3 million, and earnings $0.43 per share.
Why it's happening: 51job CEO Rick Yan explained that, as anticipated, revenue was hurt by the late Chinese new year holiday in 2015, which delayed the start to peak recruitment season and left the company "time constrained to recognize revenues in the first quarter."
But that should also push some peak season orders into the second quarter, so it's somewhat surprising Q2 guidance wasn't stronger. Yan elaborated, "While recruitment activity has remained positive, we are, however, sensing more employer caution." As a result, 51job thinks hiring patterns may be more volatile this year as employers adjust to slower economic growth in China.
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Nonetheless, 51job is pressing forward with its strategic long-term plan. Given that uncertainty going forward, though, it's no surprise the market is taking a step back from 51job stock today.
The article Why 51job, Inc. Stock Dropped Today originally appeared on Fool.com.
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