Why McDermott Is Poised to Bounce Back

Market-trouncing returns could be written in this 5-Star.

Brian D. Pacampara, CFA
Brian D. Pacampara, CFA
May 23, 2013 at 2:41PM
Industrials

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, engineering and construction company McDermott International (NYSE:MDR) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at McDermott and see what CAPS investors are saying about the stock right now.

McDermott facts

Headquarters (Founded)

Houston (1923)

Market Cap

$2.1 billion

Industry

Oil and gas equipment and services

Trailing-12-Month Revenue

$3.7 billion

Management

Chairman/CEO Stephen Johnson

CFO Perry Elders

Return on Equity (average, past 3 years)

11.3%

Cash/Debt

$461.5 million / $101.2 million

Competitors

Aker Solutions

Chicago Bridge & Iron

Foster Wheeler

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 98% of the 1,325 members who have rated McDermott believe the stock will outperform the S&P 500 going forward.

Just yesterday, one of those Fools, All-Star timclaason, succinctly summed up the McDermott bull case for our community:

MDR has fallen significantly from over $13 per share a few months ago, to under $9 today. This drop is due to missed earnings.

This stock has all the marks of a stock "on sale." P/E ratio, price-to-book, and debt levels are lower than many of their competitors. Current ratio is in-line with competitors, return on average assets is higher than competitors.

It may take a while for price to recover, but with current price near 52 week low, and a recent support-level check, I think it's a good entry point.