Insteel Industries (IIIN) shares plummeted 5.17% in Thursday's trading session, despite the company reporting better-than-expected third-quarter results. The significant drop has left investors questioning the underlying reasons behind the market's negative reaction.

The construction supplies manufacturer reported Q3 earnings per share of $0.78, substantially beating the analysts' estimates of $0.57. Revenue also surpassed expectations, coming in at $179.9 million compared to the forecasted $176 million. However, these positive figures weren't enough to prevent the stock's sharp decline.

Several factors may have contributed to the unexpected stock plunge. Despite the earnings beat, investors might be concerned about the company's future outlook or potential challenges in maintaining its growth trajectory. The reported gross margin of 17.1% could also be a point of concern for some analysts. Additionally, with Insteel's shares having risen 3.5% this quarter and 42.6% year-to-date prior to the earnings release, some investors may be engaging in profit-taking. The company's statement about "taking proactive steps to manage costs" might have also raised questions about potential headwinds in the coming quarters. As the market digests these mixed signals, investors will be closely watching for any further guidance or clarification from Insteel's management in the coming days.