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Here’s why the a2 Milk Company Ltd’s (Australia) share price fell 9% today

Credit: Bertalan Szürös

The share price of a2 Milk Company Ltd (Australia) (ASX: A2M) has fallen further from its perch today, shedding 9.4% to trade at $1.69. For the sake of comparison, it hit a high of $2.30 on Wednesday.

Source: Yahoo! Finance

Source: Yahoo! Finance

The a2 Milk Company’s shares surged higher earlier in the week on the back of another solid earnings report and, perhaps more importantly, another upgrade to its full-year earnings guidance.

But investors have since taken their foot off the accelerator with the company’s shares. The situation was exacerbated today when a2 Milk’s rival, Bellamy’s Australia Ltd (ASX: BAL), reported its own earnings results.

The results were solid, as was the outlook, which you can read more about here. But investors may still have been disappointed that the company didn’t guide for even greater sales than it did, whilst also being disappointed that the company’s earnings before interest and tax (EBIT) margin wasn’t expected to improve even further in the second half.

Both companies have the potential to grow further in the coming years, and are well worth a position on your watchlist.

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Motley Fool contributor Ryan Newman owns shares of Bellamy's Australia. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. You can follow Ryan on Twitter @ASXvalueinvest.

The Motley Fool Australia owns shares of Bellamy's Australia. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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