Drew Industries Earnings: Here’s Why Investors are Ambivalent Now

Drew Industries Inc. (NYSE:DW) delivered a profit and missed Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company.

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Drew Industries Inc. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share decreased 26.53% to $0.36 in the quarter versus EPS of $0.49 in the year-earlier quarter.

Revenue: Rose 12.99% to $252.59 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Drew Industries Inc. reported adjusted EPS income of $0.36 per share. By that measure, the company missed the mean analyst estimate of $0.56. It missed the average revenue estimate of $266.3 million.

Quoting Management: “In the first quarter of 2013, our labor efficiencies continued to improve, with labor costs as a percent of sales declining more than 1 percent compared to the fourth quarter of 2012,” added Jason Lippert, CEO of Drew’s subsidiaries, Lippert Components and Kinro. “We are also implementing additional efficiency improvements. As we previously reported, we expected the cost of implementing facility consolidations, realigning production, and improving production processes to continue in the first quarter of 2013, although to a lesser degree than in the 2012 fourth quarter, and this was the case. These costs are expected to decline further in the second quarter of 2013. We remain confident in our ability to achieve further profit improvement, particularly during the second half of 2013, as these costs return to more normal levels, and as the bottom-line impact of the efficiency improvements gains momentum.”

Key Stats (on next page)…

Revenue increased 26.15% from $200.23 million in the previous quarter. EPS increased 44% from $0.25 in the previous quarter.

Looking Forward: Analysts have a more positive outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has risen from a profit of $0.62 to a profit $0.66. For the current year, the average estimate has moved down from a profit of $2.16 to a profit of $2.15 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)