Why MYR Group'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 electrical contractor MYR Group (Nasdaq: MYRG  ) fell as much as 15% in early trading, after announcing a disappointing earnings report.

So what: Revenue rose 19%, to $250.6 million, and earnings per share more than doubled, to $0.41. But analysts were expecting more growth on the top line and another $0.03 more in profit per share on the bottom line, so the stock was sent to the doghouse.

Now what: The company is still growing and generating strong profits, but investors never like missing earnings targets and may also be looking at a decline in backlog. I think this is partially due to economic and political uncertainty in the short-term that has held back infrastructure investment.

Shares are trading at about 15 times trailing earnings and, with strong growth potential in the future as we upgrade our electric infrastructure, I think MYR provides a lot of opportunity. It's contrarian today, but I think this is a nice discount for investors who have an eye on the future.

Interested in more info on MYR Group? Add it to your watchlist by clicking here.


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10/21/2016 4:00 PM
MYRG $29.65 Up +0.05 +0.17%
MYR Group CAPS Rating: *****