What Happened?
Shares of global electronics contract manufacturer Kimball Electronics (NYSE: KE) fell 11.1% in the morning session after the company reported third-quarter financial results that, despite beating profit estimates, revealed a decline in year-over-year sales.
Net sales for the quarter were $365.6 million, a 2.3% drop compared to the same period last year, though this figure did beat Wall Street's expectations. While revenue fell, the company's adjusted earnings of $0.49 per share significantly surpassed analyst forecasts and more than doubled from the prior year's quarter. Kimball Electronics also reconfirmed its full-year sales guidance of around $1.4 billion. The sharp drop in the stock price suggested investors were more concerned with the overall revenue contraction and sluggish long-term growth trends than the better-than-expected profitability.
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What Is The Market Telling Us
Kimball Electronics’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. But moves this big are rare even for Kimball Electronics and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 8.7% on the news that the company reported second-quarter 2025 earnings and revenue that significantly surpassed analyst expectations. The electronics manufacturer posted adjusted earnings per share of $0.34, which was 83.8% higher than Wall Street estimates. Revenue for the quarter came in at $380.5 million, also beating consensus forecasts by 14.2%. This strong outperformance likely caught investors' attention, as the results were better than feared. The positive surprise came even as sales fell 11.6% from the same period last year, reflecting a broader cyclical downturn in the Electrical Systems industry. However, looking ahead, analysts project that both revenue and earnings will decline over the next twelve months.
Kimball Electronics is up 48.9% since the beginning of the year, but at $27.38 per share, it is still trading 17.3% below its 52-week high of $33.13 from September 2025. Investors who bought $1,000 worth of Kimball Electronics’s shares 5 years ago would now be looking at an investment worth $2,078.
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