Shaw Group Earnings Preview

Investors are bracing for the worst and waiting to see if Shaw Group (NYSE: SHAW  ) will fall short of Wall Street forecasts for the third consecutive quarter. The company will unveil its latest earnings on Wednesday. Shaw Group, along with its wholly owned and majority-owned subsidiaries, is a global provider of technology, engineering, procurement, construction, maintenance, fabrication, manufacturing, consulting, remediation, and facilities-management services.

What analysts say:

• Buy, sell, or hold?: Analysts think investors should stand pat on Shaw Group with 11 of 13 analysts rating it hold. Analysts don't like Shaw Group as much as competitor Granite Construction overall. Four out of nine analysts rate Granite Construction a buy compared to two of 13 for Shaw Group. Analysts' rating of Shaw Group has stayed constant from three months prior.
• Revenue forecasts: On average, analysts predict $1.52 billion in revenue this quarter. That would represent a rise of 2.7% from the year-ago quarter.
• Wall Street earnings expectations: The average analyst estimate is earnings of $0.43 per share. Estimates range from $0.29 to $0.56.

What our community says:
CAPS All-Stars are solidly behind the stock with 88.6% giving it an outperform rating. The community at large agrees with the All-Stars with 94.2% awarding it a rating of outperform. Fools are keen on Shaw Group and haven't been shy with their opinions lately, logging 221 posts in the past 30 days. Even with a robust four out of five stars, Shaw Group's CAPS rating falls a little short of the community's upbeat outlook.

Management:
Revenue has fallen for the past three quarters. The company's gross margin shrank by 7.2 percentage points in the last quarter. Revenue fell 14.4% while cost of sales fell 7.7% to $1.47 billion from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter	Q4	Q3	Q2	Q1
Gross Margin	0.6%	0.7%	8.1%	3.9%
Operating Margin	(3.4%)	(7.3%)	3.0%	(0.6%)
Net Margin	(6.1%)	(4.7%)	0.1%	(1.1%)

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Earnings estimates provided by Zacks