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.


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  • 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...

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4/15/2014 4:02 PM
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