Shares of XPEL, Inc. (NASDAQ: XPEL) plummeted 5.66% in intraday trading on Wednesday, following the release of its third-quarter earnings report. Despite posting revenue growth, the company's earnings per share fell short of analyst expectations, leading to a selloff.
XPEL reported Q3 revenue of $125.4 million, representing an 11.1% increase from the same period last year and surpassing the analyst consensus estimate of $119.3 million. However, the company's earnings per share (EPS) came in at $0.47, missing the analyst forecast of $0.52 and declining from $0.54 in the previous year. This earnings miss appears to be the primary driver behind the stock's significant drop.
Adding to investor concerns, XPEL announced plans for strategic investments ranging from $75 million to $150 million aimed at boosting margins by 2028. While this long-term strategy could potentially improve profitability, it may have raised short-term concerns about increased expenses. The market's negative reaction suggests that investors are prioritizing current earnings performance over future growth prospects. Despite the positive outlook for Q4, with revenue guidance of $123 million to $125 million exceeding analyst expectations, it wasn't enough to offset the disappointment from the Q3 earnings miss.
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