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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 oil industry equipment maker Cameron (NYSE: CAM ) dropped 15% today after the company reported disappointing earnings.
So what: Third quarter revenue rose 13% to $2.5 billion but came in below the $2.9 billion estimate from analysts. Net income dropped to $189.6 million from $223.6 million a year ago and on an adjusted basis earnings per share were $0.81, which was two cents below estimates.
Now what: Cameron is actually having trouble meeting all of the demand it has from the industry, putting pressure on margins. The good news is that orders remain high, so if management can increase capacity the future is bright. Orders totaled $3 billion during the quarter and backlog increased to $11.2 billion, so while the miss is troubling I like the high demand for the company's services. Cameron's forward P/E ratio now stands at just 12, and considering the growth potential I think today presents a buying opportunity for long-term investors.
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