Why Shares of Commercial Vehicle Group, Inc. Plunged 24% Today

MarketsMotley Fool

What happened

Shares of Commercial Vehicle Group, Inc. (NASDAQ: CVGI) fell as much as 24% in trading Tuesday after reporting a large fourth-quarter loss. There wasn't much of a bounce off the low with shares trading down 22.3% at 2:55 p.m. EDT.

Continue Reading Below

So what

On a GAAP basis, revenue was up 25.5% in the fourth quarter to $188.3 million, but the company swung from net income of $400,000 a year ago to a loss of $7.2 million, or $0.24 per share. On a non-GAAP basis, net income was $3.7 million, or $0.12 per share, but even that was a penny below expectations.

A 40% jump in Class 8 truck builds in the fourth quarter drove better results and management said 2018 looks strong as well. But investors had their sights set on even better profitability, and that's why the stock is down big today.

Now what

All of Commercial Vehicle Group's end markets are improving and the company's financial results are getting better as well. But even a slight miss of expectations and fear that growth numbers won't be as good as expected can send a stock sharply lower. I think that's what we're seeing in the company's stock today, and given the forward earnings multiple of 7.2, I think today is a great entry point for value investors looking at the vehicle manufacturing business.

10 stocks we like better than Commercial Vehicle GroupWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Commercial Vehicle Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of March 5, 2018

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