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Why Babcock & Wilcox Enterprises Inc's Shares Popped 18% Today

By Travis Hoium – May 10, 2017 at 5:06PM

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Earnings weren't great, but Babcock & Wilcox Enterprises Inc sees a better 2017 than investors were anticipating.

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.

Power plant shown at sunset.

Image source: Getty Images.

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.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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