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 offshore energy helicopter services specialist CHC Group (NYSE: HELI  ) sank 12% today after its quarterly results and outlook disappointed Wall Street.

So what: CHC shares have rallied nicely in recent months on signs of rebounding growth, but today's fourth-quarter top-line miss -- revenue rose just 3% to $452.78 million versus the consensus of $466.64 million -- coupled with downbeat guidance is forcing Mr. Market to quickly sober up. And while CHC's loss of $26.1 million was narrower than expected, adjusted EBITDAR margin for the quarter fell 240 basis points to 32%, suggesting that the company's competitive position is weakening as well.

Now what: For full-year fiscal 2015, management now sees EBITDAR growth in the high single to low double-digit range on a revenue increase in the mid to high single-digit range. "Major indicators about expected growth in oil-and-gas exploration and production remain positive, especially in deepwater and ultra-deepwater locations," President and CEO William Amelio reassured investors in a press release. "We believe we are positioning CHC well to capture this growth, while delivering on our financial goals for fiscal 2015 and the longer term." When you couple CHC's turbulent top-line trend with its still-hefty debt load, however, I'd hold out for an even wider margin of safety before betting on that bullishness. 

Breaking: This small cap stock is poised to soar higher
Growth stocks jump up and down on a daily basis, but the smartest investors know the path to riches is finding these big winners early. The mission of The Motley Fool's Rule Breakers team is to identify these once-in-a-generation stocks. This team of analysts recommended Baidu in 2006 (up +2,000%) and Chipotle in 2007 (up +800%). And luckily for you (and their thousands of existing members), the team believes it has found its next big winner. Click here for your copy of this timely report.


Read/Post Comments (0) | 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.

Be the first one to comment on this article.

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: 3024323, ~/Articles/ArticleHandler.aspx, 12/17/2014 2:59:15 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