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: Shares of engineering and construction company Chicago Bridge & Iron Company N.V. (NYSE:CBI) jumped as much as 16% today after reporting earnings. The company is a major holding of Warren Buffett's Berkshire Hathaway and when you see the company's valuation you may see why.
So what: Fourth-quarter revenue rose 12.4% to $3.37 billion and net income fell 24% to $150.4 million, or $1.37 per share. The drop in net income was due to a tax benefit in the year ago quarter.
On an adjusted basis, which pulls out one-time items like the tax benefit, earnings were $1.47 per share, four cents ahead of estimates.
Now what: New awards for the year in the amount of $16.3 billion should ease some investors' fears that low oil prices would have a large adverse impact on earnings going forward. Management doesn't think low oil prices will have too much impact on projects this year, but did lower revenue guidance to $14.4 billion-$15.2 billion and earnings guidance to $5.55-$6.05 per share. But that was still at the top end of the $14.4 billion in revenue and $5.63 per share in earnings that Wall Street was expecting.
I think shares of Chicago Bridge & Iron have sold off far too much on fear that oil spending would subside, but there's still a lot of infrastructure to be built in energy and other industries. With shares trading at 8.4 times the bottom end of earnings, even after today's pop, I think there's still room for shares to move higher.
Travis Hoium owns shares of Berkshire Hathaway. The Motley Fool recommends Berkshire Hathaway. The Motley Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.