Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shaw (Nasdaq: SHAW) shares slumped (say that five times fast) as much as 14% this morning, dropping in response to a miserable "earnings" report. I put that word in "quotes" because in fact, the construction company didn't earn anything in the fiscal third quarter; instead, it lost $0.86 per share.

So what: Revenues were down 17% in comparison to fiscal Q3 2010, and Shaw's net loss this year more than erased the $0.57 profit it had earned in yesteryear's Q3. Management called the quarter "challenging" and "disappointing" -- and Wall Street agreed, as Stifel Nicolaus downgraded the stock to hold.

Now what: Shaw bulls will tell you that after today's sell-off, the stock looks attractive at 11 times earnings, and 15% projected long-term growth. Shaw bears (and realists) would probably respond that that's actually 11 times forward earnings the bulls are talking about. And they might add that based on what Shaw has actually earned over the past year, the stock's really selling for closer to a 63 P/E.

My advice: Accentuate the negative. Because Shaw just eliminated most of the reasons to feel positive about its stock.

Bears versus Bulls -- who will carry the day? Add Shaw to your Watchlist and find out.

Fool contributor Rich Smith does not own (or short) Shaw Group. The Motley Fool has a disclosure policy.

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