Please ensure Javascript is enabled for purposes of website accessibility

Why Babcock & Wilcox Stock Just Dropped 19%

By Rich Smith - Mar 2, 2018 at 11:39AM

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

One CEO is gone, and all of Babcock's profits are gone, too.

What happened

When a CEO is spied heading for the exits right before earnings, that's rarely good news for investors. That generalization proved accurate today, after power equipment maker Babcock & Wilcox (BW 1.03%) reported its fiscal Q4 2017 earnings -- and saw its stock crushed in response.

As of 11 a.m. EST, Babcock stock was down 19.2% after falling as far as 29% earlier in the day.

A power factory with smokes coming out of three smokestacks.

Image source: Getty Images.

So what

Last night, Babcock & Wilcox reported that it lost $2.44 per share in Q4 2017, even worse than last year's $1.47 per share loss. This was a much worse result than the $0.06 per share loss that Wall Street analysts had predicted. Babcock blamed the effects of tax reform for about $1.42 of its loss. But even without that charge to earnings, the stock would have lost more than $1 a share -- hardly a good result.

Sales grew 7% in the quarter to $408.1 million -- one of the few bright spots in a bleak report.

For the year, Babcock reported sales of $1.6 billion and an $8.09 per share loss.

Now what

Babcock & Wilcox is having a tough 2018, but things could be worse. Issuing new guidance for the year, management predicted that revenues should range between $1.5 billion (down year over year) and $1.7 billion (which would be an improvement).

Management did not give any clear GAAP guidance for earnings, which may be adding to investors' dismay today.

Rich Smith has no position in any of the 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.
$7.81 (1.03%) $0.08

*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 08/18/2022.

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.