Why Boulder Brands Inc. Stock Dropped Like a Rock Today

By Steve SymingtonFool.com

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What:Shares of Boulder Brands fell more than 21% early Wednesday after the health-conscious food maker announced the surprise resignation of its co-founder and CEO, Steve Hughes, and followed with a weaker-than-expected outlook.

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So what: In a press release this morning, Boulder Brands said Hughes, who helped found Boulder Brands nearly 10 years ago, has resigned as CEO and as a member of the board, effective immediately.

"As Boulder Brands enters a new period of development," explained Hughes, "I believe now is the right time for a leadership transition. It has been exciting to watch a simple idea turn into a leading natural foods company with the scale and resources to expand our mission of making people's lives healthy across the country."

Boulder brands has initiated a national search process to identify a permanent CEO. In the meantime, the board has appointed current Boulder Brands Chief Operating Officer James Leighton to serve as interim CEO.

If that wasn't enough to make investors skittish, Boulder Brands also stated it now expects second-quarter revenue in the range of $122 million to $124 million, or a decrease of 5% to 7% year over year. This result includes flat to 2% growth in Boulder Brands' Natural segment, and a decline or 16% to 18% from its Balance segment. That should translate to adjusted earnings per diluted share of $0.00 to $0.02.

Analysts, on average, were anticipating earnings of $0.04 per share on revenue of $136 million.

Now what: Boulder Brands also promised it will update its full-year 2015 outlook when it announces second-quarter results, so there's a chance this weakness will be limited to the near term. But given the surprise leadership transition and disappointing Q2 outlook, shares are likely to remain under pressure, at least until the official earnings report hits. As a result, I'm content watching Boulder Brands stock from the sidelines for now.

The article Why Boulder Brands Inc. Stock Dropped Like a Rock Today originally appeared on Fool.com.

Steve Symington owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. The Motley Fool is short Boulder Brands. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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