Why McDermott International's Shares Dropped

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 industry contractor McDermott International (NYSE: MDR  ) fell as much as 17% after the company reported earnings.

So what: Revenue rose 11% in the first quarter, to $807.5 million, ahead of the $749.5 million estimate. But on the bottom line, the company made a $20.6 million, or $0.09 per share, profit when analysts were expecting earnings of $0.14 per share. 

Now what: News for the future doesn't look much better because management said operating margins may fall to break even or worse in the second and third quarters because of a project in Australia. The company is having problems executing on projects, which is hurting the bottom line more than revenue. I don't see a reason to be a buyer today, and would wait for operations to improve before getting bullish.

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


Read/Post Comments (1) | 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.

  • Report this Comment On May 22, 2013, at 2:28 PM, timc1981 wrote:

    What do you think about MDR's price now? It seems like it found a new support level somewhere in the high $8s.

    Assuming it doesn't have disastrous financial results soon, I'd expect it back to $11 within the next 6 months...

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2422026, ~/Articles/ArticleHandler.aspx, 11/25/2014 6:19:31 PM

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