Please ensure Javascript is enabled for purposes of website accessibility

Why Babcock & Wilcox Stock Just Dropped Another 23%

By Rich Smith - Mar 14, 2018 at 12:39PM

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

Your guess is as good as anybody else's.

What happened

Babcock & Wilcox (BW -3.81%) investors just cannot catch a break. Shares of this industrial equipment maker got crushed when it reported earnings earlier this month -- a reaction that at least had the justification of being caused by a catalyst. With shares down a further 23% as of noon EDT today, though, it seems investors are willing to sell Babcock & Wilcox stock for no reason at all.

So what

So what did Babcock & Wilcox do today to justify its latest sell-off? For the life of me, I cannot tell you. The company hasn't issued any press releases to explain the negative reaction, nor filed anything negative with the SEC. Neither StreetInsider.com nor TheFly.com -- my two favorite go-to sites for ratings news -- contain even a hint of negative Wall Street sentiment.

It almost seems like investors' default option for Babcock & Wilcox stock these days is to sell -- a fact that the greater than 23% short interest in the stock seems to confirm.

Stock chart falling through floor

Why is everyone selling Babcock stock today? Well, why not? Image source: Getty Images.

Now what

Which is not to say that that's the wrong way to treat Babcock & Wilcox stock. With no earnings to its credit (the company has actually lost money in three of the past four years), negative free cash flow (likewise -- a three-time loser in four years), and more debt than cash on its balance sheet, Babcock & Wilcox certainly doesn't look like the most attractive business today.

On the other hand, analysts who follow the stock think that this year could be the year Babcock finally turns the corner and begins generating at least a trickle of free cash flow. If and when that happens, sentiment on Babcock & Wilcox stock could turn up just as sharply as it's recently turned down.

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.
BW
$7.58 (-3.81%) $0.30

*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
402%
 
S&P 500 Returns
129%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/17/2022.

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.