Here's Why Insteel Stock Crashed 20% Today
Shares of Insteel Industries (NYSE: IIIN) fell nearly 20% by 2 p.m. today after disappointing second-quarter earnings. The results reflect broader trends likely to emerge during this earnings season.
Insteel manufactures and markets steel wire reinforcing products for application in reinforced concrete structures, principally in non-residential construction. It's the kind of business with relatively high fixed costs and exposure to raw material costs, particularly steel.
As such, a combination of tariff costs, rising energy costs, and higher freight costs is pressuring its costs. The good news is that the company is raising prices in response (a 16.2% increase in average selling prices in the quarter), and, as CEO H.O. Woltz III noted in the earnings release, "we are comfortable with our market position that includes minimal direct import competition." Woltz, no doubt, feels that way because Insteel sells heavy products that are difficult for foreign competitors to ship into the country at competitive prices.
Source Fool.com
