Why Aceto Corporation's Shares Plunged 18% Today

Human health products are a new focus for Aceto Corporation. Image source: Getty Images.

What happened

Shares of Aceto Corporation (NASDAQ: ACET) fell as much as 18.2% on Friday after the company reported earnings. As of 3 p.m. EST, shares were still down 17.4% on the day.

So what

Fiscal second-quarter net sales fell 4.6% to $131.7 million, and the company swung to a net loss of $0.6 million from net income of $8.3 million a year ago. Diluted loss per share was $0.02, versus a profit of $0.28 per share a year ago.

Non-GAAP (generally accepted accounting principles) adjusted earnings per share were $0.24, which fell well short of the $0.30 Wall Street analysts were expecting.

Now what

Results have been worse than expected because of the acquisitions of Citron Pharma and Lucid Pharma. As these products are integrated into the company, results should improve, but things can be choppy in the meantime. Management expects improvement to start hitting in the second half of the fiscal year, followed by double-digit adjusted earnings-per-share growth in fiscal 2018. If that happens, shares will be cheap at 10 times this year's expected earnings, but there's a lot to prove, given last quarter's falling sales and deteriorating bottom line.

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Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.