What Happened:

Shares of global electronics contract manufacturer Kimball Electronics (NYSE:KE) fell 15.4% in the afternoon session after the company reported second-quarter earnings results, with revenue and EPS falling below expectations. Notably, net sales in the automotive vertical, its largest segment, fell 9% year on year, driven by "continued weak demand in Europe, incremental softness in North America, and a decline in China." Guidance was also weak as its full-year revenue guidance missed. Management highlighted that the guidance includes expectations for continued macro weaknesses till fiscal 2025 based on early indications from customers. Overall, this was a weaker quarter.

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What is the market telling us:

Kimball Electronics's shares are somewhat volatile and over the last year have had 7 moves greater than 5%. But moves this big are very rare even for Kimball Electronics and that is indicating to us that this news had a significant impact on the market’s perception of the business.

Kimball Electronics is down 30.9% since the beginning of the year, and at $18.09 per share it is trading 41.8% below its 52-week high of $31.11 from August 2023. Investors who bought $1,000 worth of Kimball Electronics's shares 5 years ago would now be looking at an investment worth $1,313.

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