Please ensure Javascript is enabled for purposes of website accessibility

Why Babcock & Wilcox Enterprises Inc. Plunged a Whopping 64% Today

By Travis Hoium - Aug 10, 2017 at 12:08PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Failing to meet your own guidance is a cardinal sin on the stock market.

What happened 

Shares of Babcock & Wilcox Enterprises Inc. (BW -9.09%) fell as much as 64% in trading Thursday after the energy supplier reported a terrible second quarter. At 11:30 a.m. EDT, the stock was near a session low, down 62.4% on the day. 

So what

Quarterly revenue dropped 8.7% to $349.8 million and net loss more than doubled to $151.0 million, or $3.09 per share. Management said the loss was due to an unexpected $115.2 million charge related to the renewable business in the quarter. 

Coal power plant from a distance on a sunny day.

Image source: Getty Images.

The disappointment comes because management said last quarter that revenue would be about $1.8 billion and earnings per share at $0.75 to $0.95. Updated guidance is for revenue of $1.575 billion to $1.675 billion in revenue and that there's no way Babcock & Wilcox can hit its previous earnings guidance this year. 

Now what

The improvement investors were pricing into the stock earlier this year is now gone, and it's uncertain how the company will react. It's likely Babcock & Wilcox will need to issue new debt if losses persist and there may not be much willingness for the market to give that debt if the company keeps losing money. This just isn't a stock I would bet on given its poor performance over the past year. 

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Babcock & Wilcox Enterprises, Inc. Stock Quote
Babcock & Wilcox Enterprises, Inc.
$7.50 (-9.09%) $0.75

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/10/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.