What Happened?
Shares of measurement equipment distributor Transcat (NASDAQ: TRNS) fell 12% in the morning session after the company reported mixed third-quarter 2025 results that showed a miss on earnings per share and a steep decline in profit.
While revenue grew by 21.3% to $82.3 million and surpassed expectations, investors focused on the weaker aspects of the report. The company's adjusted earnings per share of $0.44 missed analyst forecasts. More significantly, net income experienced a sharp decrease of 61.4% to $1.3 million compared to the prior year. This drop in profitability was linked to higher operating expenses from recent acquisitions. The company's operating margin also compressed, falling to 4.3% from 5.5% in the same quarter last year. The market's negative reaction suggested that the strong revenue growth was overshadowed by concerns about declining profitability and shrinking margins.
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What Is The Market Telling Us
Transcat’s shares are somewhat volatile and have had 13 moves greater than 5% over the last year. But moves this big are rare even for Transcat and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 12 days ago when the stock gained 6.3% on the news that the stock extended recent gains in what appeared to be a technical move. The stock's rise marked the third consecutive day of gains. This upward trend followed a technical buy signal that was issued from a pivot bottom point earlier in the month, after which the stock had already risen over 7%. The continued buying activity, which occurred without any specific company announcements, suggested that investor sentiment was being driven by the stock's recent price performance and trading patterns rather than new fundamental information.
Transcat is down 43.9% since the beginning of the year, and at $59.55 per share, it is trading 46.9% below its 52-week high of $112.22 from November 2024. Investors who bought $1,000 worth of Transcat’s shares 5 years ago would now be looking at an investment worth $1,959.
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