Key Highlights

  • Taylor Devices dropped to about $51.99 in premarket trading from a prior close of $61.11, after reporting fiscal first-quarter Earnings of 14 cents a share against a consensus estimate of 93 cents; the regular-session close could not be confirmed.
  • Revenue came in at $7.3 million, compared with expectations of $13.2 million, a wide gap on both lines for a small company.
  • A brighter spot: the company's order Backlog rose to $55.2 million, meaning more orders are waiting to be filled, which can support future Revenue if converted on schedule.
  • The miss came on an otherwise upbeat day for stocks, with industrials among the leading S&P 500 sectors after a weak September jobs report cut odds of another Federal Reserve rate hike.

Taylor Devices (NASDAQ:TAYD) tumbled before the opening bell after its fiscal first-quarter earnings and revenue came in far below Wall Street's expectations, even as its order backlog grew. The stock dropped to about $51.99 in premarket trading from a prior close of $61.11. Where the shares finished the regular session could not be confirmed.

The Numbers

Taylor Devices earned 14 cents a share in the quarter, against a consensus estimate of 93 cents. Revenue came in at $7.3 million, compared with expectations of $13.2 million.

That is a wide gap on both lines. For a small company, a miss of that size can trigger a sharp reaction as investors reassess what the Business can earn in the near term.

There was a brighter spot. The company's backlog rose to $55.2 million. A larger backlog means more orders waiting to be filled, which can support future revenue if the company is able to convert those orders on schedule.

What Taylor Devices Does

Based in New York State, Taylor Devices makes shock absorbers, seismic dampers and related equipment that protect structures and machines from sudden forces. Its products are used in buildings and bridges to help them withstand earthquakes and high winds, as well as in aerospace and defense applications.

Project-based equipment makers can see lumpy quarterly revenue, and a quarter with fewer completed shipments can look weak even when orders keep coming in. The company has not been reported as giving a reason for the shortfall. Demand for structural protection is tied to construction activity and defense spending, both of which tend to move in long cycles rather than quarter to quarter.

Small Stocks, Big Reactions

Taylor Devices is a small, thinly traded stock. Companies of this size can move sharply on earnings news, and premarket moves in particular can be exaggerated by light trading Volume before the regular session begins.

The Rest of the Market

The miss came on an otherwise upbeat day for stocks. A weak September jobs report showed the economy added only 29,000 jobs, far below forecasts near 84,000, and the Unemployment rate ticked up. That caused odds of another Federal Reserve rate hike in October to collapse.

Industrials were among the leading S&P 500 sectors, and a cluster of rate-sensitive industrial and transport stocks rallied as Treasury yields dipped in the morning. Manufacturing added 9,000 jobs in September, and August factory orders edged up.

The Nasdaq Composite rose 319.27 points to 27,190.86, touching an intraday all-time high but not setting a record close. The Nasdaq-100 notched a record close at 30,807.93, and the Dow added 250.40 points. The S&P 500 gained 56.27 points to 7,722.72.

Treasury yields later reversed to close higher, with the 10-year near its highest level since 2002.

The Backlog's Conversion Pace Is the Key Question

Investors will want to hear more from management about why first-quarter revenue fell so far short and how quickly the growing backlog can be turned into shipments. The timing of large project orders will be key to the next few quarters. Any update to full-year expectations would also be closely read. Because Friday's close was not confirmed, Monday's trading will show whether the early selling deepened or eased.