Why CHC Group Ltd. Plunged 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 CHC Group (NYSE: HELI  ) sank 12% today after the helicopter services company's quarterly results and outlook missed Wall Street expectations.

So what: The stock has been volatile since its January IPO on valuation concerns, and today's third-quarter report -- loss of $0.32 per share on revenue of $454 million -- coupled with beat-down guidance only reinforces those worries. While maintenance and repair revenue soared 25%, CHC's total revenue only increased 3% from the year-ago period, giving analysts plenty of nervousness over its growth trajectory going forward.

Now what: Management now expects 2014 adjusted EBITDAR to be flat to slightly down and revenue to be flat to slightly up. "Long-term trends for oil-and-gas investments in deep and ultra-deep discovery and production -- where the need for our services is greatest -- remain robust," President and CEO William Amelio said. "We are pursuing our financial priorities by focusing on disciplined capital allocation, reduced leverage and positive free cash flow -- with safety leadership in the air and on the ground." When you couple the strong near-term headwinds facing CHC with its still-hefty debt load, however, I wouldn't be too quick to bet on it. 

More reliable ways to get rich
It's no secret that investors tend to be impatient with the market, but the best investment strategy is to buy shares in solid businesses and keep them for the long term. In the special free report "3 Stocks That Will Help You Retire Rich," The Motley Fool shares investment ideas and strategies that could help you build wealth for years to come. Click here to grab your free copy today.

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

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 March 15, 2014, at 12:26 PM, wesam wrote:

    it is still overvalued. I would buy when @ 5.5 - 6 max. this the real value of this stock.

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: 2875066, ~/Articles/ArticleHandler.aspx, 9/1/2015 10:37:46 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...

Brian Pacampara

I take a look at big 10% moves, as well as stock-shaking analyst calls, on a daily basis for The Fool. While I don't believe in active trading, closely monitoring Mr. Market's mood swings can help identify long-term opportunities.

Today's Market

updated 1 hour ago Sponsored by:
DOW 16,058.35 -469.68 -2.84%
S&P 500 1,913.85 -58.33 -2.96%
NASD 4,636.11 -140.40 -2.94%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/1/2015 4:01 PM
HELI $0.82 Down -0.03 -3.06%
CHC GROUP LTD CAPS Rating: No stars