The 5 biggest price percentage losers Thursday included Ambow Education (AMBO), Central Federal Corp. (CFBK), Carver Bancorp (CARV), Houston American Energy (HUSA), and Sunshine Heart (SUHE.PK). The list excludes certain securities whose movements do not reflect developments for the primary shares of firms. We break down for you what broke down with one of these stocks and provide some guidance.
Ambow Education led all price percentage losers Thursday, as the shares fell 19.6%. The company reported its first-quarter EPS, filed a statement with the SEC about a former employee's allegations, and reported on the resignation of its CFO. In other words, Thursday had bad day written all over it for the shares.
The company's March quarter report showed a net loss against estimates for a positive result, and this after analysts' consensus EPS estimates were suddenly lowered recently to $0.29 from $0.34, according to Yahoo Finance. Also, in a filing to the SEC, the company said it was conducting an internal investigation regarding "allegations of financial impropriety and wrongful conduct" made by a former employee regarding the acquisition of a training school in 2008.
It appears as if the company has changed its reporting of revenue recognition, realizing a portion as cash is collected. I could not find it stated within this report, but it was relatively apparent. Information at Yahoo Finance has the company's EPS for the prior period at EPS of $0.22, whereas the just reported EPS report has that prior-year period EPS listed as $0.03 per diluted share. This reassessment would likewise be responsible for this quarter's reported loss of $0.17 against analysts' expectations for EPS of $0.29.
Obviously, this is what drove the reassessment of the stock's valuation, as investors have new considerations for value. Add to that the CFO resignation and legal allegation, and you have a 19.6% stock price drop. This Beijing-based company may still have a good growth opportunity, and I may interview the team in the future to talk about that. For now, it seems the investment community will need to regain faith.