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Why Shares of Echo Global Logistics, Inc. Plunged 21% Today

What happened

Shares of supply-chain company Echo Global Logistics, Inc. (NASDAQ: ECHO) fell as much as 20.7% in trading Friday after the company reported second-quarter earnings. At 11:55 a.m. EDT shares were still down 17.6% for the day.

So what

Revenue was up 6% in the quarter to $470.1 million, but the company swung from a profit of $1.9 million a year ago to a loss of $0.2 million, or $0.01 per share. Adjusted for one-time items, earnings were $0.18 per share, but that still fell short of the analysts' estimate of $0.20 per share.

Image source: Getty Images.

Management said that competitive pricing has put pressure on margins, leading to the weak bottom-line results. But cost management should give it leverage if the market improves in the future.

Now what

Competition has been high in the logistics market and that's showing with Echo Global's results. It also doesn't appear that there's much relief on the horizon as companies compete aggressively, using price as their main point of differentiation. Long-term, this market is just too challenging to count on a consistent profit, and last quarter's loss is another reason I won't be buying this stock today.

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Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.