Why Babcock & Wilcox's Shares Dropped

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of energy service company Babcock & Wilcox (NYSE: BWC  ) fell 11% today, after reporting earnings.

So what: Third quarter revenue rose 14%, to $807.6 million, but net income fell 11%, to $40.5 million, or $0.37 per share on an adjusted basis. Analysts expected revenue to be $830.3 million, and earnings of $0.44 per share.

Now what: Short term, this may have been an earnings miss but, long term, management is still confident in the company. It initiated a $0.08 quarterly dividend, and also authorized a $250 million share repurchase program. I'm not jumping on shares because of the declining profit but, at 11 times forward earnings, shares aren't trading at an unreasonable price.

Interested in more info on Babcock & Wilcox? Add it to your watchlist by clicking here.


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