What happened
Shares of engineering and construction firm McDermott International (MDR +0.00%) are down 23% as of 1:30 p.m. EDT today. Today's drastic stock plummet comes after yesterday's free fall that was halted multiple times and ended the day down 63%.
So what
It has been a rough couple of days for the engineering and construction firm. Yesterday's bombshell was a report in The Wall Street Journal that it was bringing on AlixPartners as a consultant. The hiring of consultants isn't normally a big deal, and management noted in a press release later in the day that it engages consultants all the time. The thing is, when you engage a consultant that specializes in turnarounds and has guided several large companies through bankruptcy proceedings, it's going to set off some alarm bells.
Image source: Getty Images.
The company has had its fair share of struggles lately. After reporting much worse-than-expected second-quarter results and revising its guidance down for the year, McDermott appears to be struggling more than management had initially let on.
Now what
As tempting as it may be to see this epic stock drop after the past few days and consider this as a deep value stock with a slight chance at a turnaround, there is just too much we don't know about what is going on at the company to make an educated decision here. The engagement of a turnaround consultant means there are likely going to be some significant changes to the business that will probably involve asset sales or some other less shareholder-friendly moves.
Anyone buying McDermott's stock today is making a purely speculative gamble that the company will be able to make some sort of recovery, and that could be a dubious decision at best. This stock simply looks too risky to consider making any kind of investment today.
