What Happened?
Shares of government engineering solutions provider Amentum Holdings (NYSE:AMTM) fell 3.3% in the afternoon session after the company reported third-quarter financial results that included a significant miss on GAAP earnings per share, even as revenue surpassed expectations. The government engineering solutions provider announced revenue of $3.56 billion, which edged past analysts' forecasts. However, the company's GAAP profit of just $0.04 per share fell 73.3% short of consensus estimates. GAAP, or Generally Accepted Accounting Principles, is a standard method for financial reporting. While the firm's adjusted earnings, which excluded certain one-time items, did top expectations, investors appeared to focus on the substantial miss in standard profitability. The company also slightly lifted its revenue guidance for the full year.
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What Is The Market Telling Us
Amentum’s shares are extremely volatile and have had 33 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 5 days ago when the stock dropped 3.3% on the news that a surprisingly weak U.S. jobs report was released, fueling concerns about a slowing economy. The U.S. economy added only 73,000 jobs, falling significantly short of economists' expectations, while figures for May and June were revised down, erasing 258,000 previously reported jobs. The professional and business services industry itself shed 14,000 jobs. This data points to a cooling labor market, fueling concerns of a slowing economy. A weaker economic outlook often leads to reduced corporate spending on key services like IT consulting and professional staffing, which directly impacts the sector's revenue and growth prospects. The report immediately increased investor expectations of an interest rate cut by the Federal Reserve.
Amentum is up 15.7% since the beginning of the year, but at $25.07 per share, it is still trading 24.9% below its 52-week high of $33.40 from November 2024. Investors who bought $1,000 worth of Amentum’s shares at the IPO in September 2024 would now be looking at an investment worth $849.54.
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