stock price not moving ??

Question

i purchased stocks of a company called ACE which is insurance company and the price of my purchase is 28$ dollars and the company announced earning above expected and analysts upped EPS expectations to 3.7$ the problem is this news didnt have effect on the price of the stock and it has been a month since the news and i dont know why ?? it should move upwards from news like this right ?? can any one tell me why it havent moved ?? what should i do sell or hold ?

Answer 1

ACE, the insurance company I know of (both the stock and that I have a policy with them) is selling for about $58 and change last I checked. Standard&Poors gives them a 4-star, Buy rating (think about a grade of B when you were in school). They have a 12-month target of about $70 last I heard, along with about $7+ eps and a dividend of a tad bit over a dollar a share. Meanwhile, another major rating company has them at "underperform" and part of that is because still another rating company, Moody's, devalued the rating on their (ACE) debt. Because of the credit crunch, ACE's commercial paper is devalued to slightly above used toilet paper--just like has happened for scads of banks and insurance companies elsewhere.

Sales are good, an estimated $14+billion this year, compared to $7billion in 2002 and a fairly steady line in between. The same company that rates them "underperform" has a better earnings estimate of $8 a share. Compared to earning 28 cents in 2002, and a respectible mix of numbers in between, it all says some intrinsicly good things about the company.

The question is, do you want to sell and let the credit markets sort things out, then buy them back later (when they will be much more expensive), or buy some more while they are cheap, or simply hold and wait. This issue is not that you bought a dog, but that you have a much bigger storm to weather before that dog will go out and hunt again.

Answer 2

1

Answer 3

There are several reason why a stock will not go up. If you look at ACE they have declared dividend which usually will push the price down per the amount of dividend pay per share. The earnings were already accounted for in the stock price so the anoucement did not make the stock go up. As a matter of act some analysts did downgrade ACE from outperform to market perform, which leads to say that the earnings were already priced into the stock. Very often stock will move because of future performances not past performance. In case of an insurance having higher earnings might not be the entire story. Investors might be looking for membersip/customer increase, or cost control, or cost cutting. You really have to analyse what has driven the earnings, are those important factors that will predict the future. Finally has ACE any MBS exposure or CDO or subprime exposure? where do they park their excess cash?
When you buy a stock you really have to understand the company, the underlying performance, the valuation that drive the stock price. Is the company fairly valued? you really have to do your research before buying.

Answer 4

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Answer 5

it isn't common nor does it make experience most of the time. a lot of a flow might want to be in accordance to expectancies. Apple may educate record income, yet when traders were gazing for even better then the inventory fee will nonetheless bypass down. yet another component is the "outlook" for the employer, this is many times suggested at income comments. the employer may have stellar income yet mission a rocky next quarter or next 12 months.

Answer 6

the 28 already reflects that the investment community as a whole already KNEW that earnings would be above expected. So really that announcement isn't going to affect the short term price.

Answer 7

when you heard about it, everyone else already did too...and so the price already went up when u bought it

you sound like you don't know what you're doing with the stock market....my advice is you shouldn't invest until you learn more

Answer 8

I was curious on the answer too

Answer 9

give it a good kick in the rear,

Answer 10

thank you for the replies, much appreciated