Why MRC Global Inc'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 industrial distributor MRC Global Inc (NYSE: MRC  ) fell 16% today after reporting earnings.

So what: Fourth-quarter revenue was up 2.9%, to $1.34 million, ahead of the $1.31 billion estimate from Wall Street. The problem is that adjusted earnings per share came in at $0.32, $0.09 worse than estimates. Last year's quarterly adjusted earnings were $0.55 per share. 

Now what: The negative trajectory of earnings are the biggest concern because analysts are expecting earnings per share to jump to $2.45 by 2015. Right now, that growth doesn't appear to be materializing, and that's why shares are down so much today. I'd look at this report with caution, and would like to see margins improve, and more revenue growth before jumping into the stock.

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