That appeared to be the case on Friday when WMS Industries (WMS) reported outstanding earnings for the second quarter but watched as their share price fell 9% during a trading day when activity was four times heavier than normal.
The company said earnings grew to $23.7 million or $0.41 per share as compared to last year when earnings were $16 million or $0.27 per share. Analysts had estimated that net income would be $0.36 per share.
Earnings included a five-cent per share gain that related to a trademark lawsuit settlement.
Revenues from product sales improved to $115 million from $104.7 million while gaming operations revenue jumped to $63.4 million from $54.5 million.
Even though the company’s stock sold off during the day, analysts were impressed with the quarterly result.
"This was a positive quarter for WMS as the company continues to be able to offset a slow domestic replacement cycle by producing top-notch game content," wrote Steve Kent of Goldman Sachs in a note to clients.
The results, he said, "show that while there is certainly a cautious environment regarding slot purchases, casinos are still spending some money."
That was not the comment of many analysts following the quarterly results recently reported by International Game Technology. The results showed a major decline in profits from the corresponding period, primarily because casinos had slowed their purchases of replacement machines.
Also impressing analysts with its quarterly report, was WMS’s announcement that it was maintaining its forecast for fiscal 2009. It expects revenues to be in the range of $712 million to $728 million.
At the end of the trading day on Friday, shares of WMS were changing hands at $22.22 each, down $2.18 from the opening.