Just over a year ago I wrote an article on Tesco Corporation (TESO), calling it A Small Cap To Add To Your Portfolio. Recently, I got a question on this article that asked, "Could you explain the MASSIVE dip in TESO price on Feb. 27?" So, this one is for you.
On Feb. 27th the company released its Q4 and full year 2013 results . The company reported adjusted net income of $.22 which was a "miss" by ~26.5%; analysts estimated the company was to report an EPS of $.30 in Q4. This "miss" was led by the company's Top Drive segment. The segment reported a significant decrease when compared to 2012 results. The top drive segment reported revenues of $311.6 million in 2013, a drop of 12.91% compared to Tesco's 2012 result of $357.8 million. This drop in the Top Drive businesses was a blow to the company's bottom line as earnings for the full year were $36.3 million, ~28% less than 2012's earnings of $49.8 million. So what was the cause of this negative earnings surprise?