Why McDermott's Shares Dropped Today

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 drilling platform builder McDermott (NYSE: MDR  ) fell 16% today after the company reported earnings.

So what: Revenue rose 22% in the fourth quarter, to $996 million, which came in ahead of the $980 million estimate from analysts, but the bottom line wasn't as strong. Net income was $40.5 million, or $0.17 per share, which was well below the $0.23 estimate; hence, the fall today.  

Now what: The company is being more choosy about the projects it undertakes, which is leading to lower margins, a trend that management expects to continue. Investors were hoping for big things next year, but estimates may have gotten ahead of actual operations. I'd take a cautious approach. McDermott is still profitable, however, so if the stock falls into single digits, it may be worth scooping up for the long-term.

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

 

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2289092, ~/Articles/ArticleHandler.aspx, 7/28/2014 6:24:23 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement