What happened
Shares of Babcock & Wilcox Enterprises Inc (BW 0.54%) jumped as much as 17.8% in trading Wednesday after reporting first-quarter financial results. At 3:40 p.m. EDT, shares were holding at a 10.1% gain for the day.
So what
Revenue fell 3.2% in the quarter to $391.1 million and the company swung to a loss of $7 million, or $0.14 per share. On an adjusted basis, the loss was $0.05 per share, which was still $0.02 worse than expected.
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What investors were really looking at on Wednesday was management's guidance of $1.8 billion in revenue for 2017 and adjusted earnings of $0.75 to $0.95 per share. That compares to estimates of $1.78 billion in revenue and $0.72 per share in earnings.
Now what
Management is bullish on the power business, despite recent weakness, and renewables are expected to be a growth driver long term. As Babcock & Wilcox moves more into international markets it'll be able to grow even more, particularly in renewables. After sending shares sharply lower to start the year, investors just seem to have set expectations a little too low. And this recovery in shares is putting a little more value on potential growth.
