Please ensure Javascript is enabled for purposes of website accessibility

Why Forum Energy Technologies Inc's Shares Plunged 12% Today

By Travis Hoium - Jul 24, 2015 at 1:03PM

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

It's earnings season, and Wall Street didn't like much of what Forum Energy Technologies Inc had to say about earnings in the second quarter.

What: Shares of Forum Energy Technologies Inc (FET 1.26%) dropped as much as 12% today after the company reported very disappointing earnings.

So what: Revenue for the second quarter fell 34% to $284.4 million and net income dropped 78% to $8.9 million, or $0.10 per share. Revenue fell short of the $312.2 million Wall Street analysts had projected and even earnings adjusted for restructuring costs of $0.16 per share were $0.02 behind estimates.  

Now what: It's actually commendable that Forum Energy Technologies made any profit in the quarter considering the deterioration in drilling. North American land rig count dropped 51% year over year and production completions were down as well, both of which affected revenue. But the results were below expectations, and expected earnings of $0.08 to $0.13 per share in the third quarter were below analysts' target of $0.17 per share.

Buying this stock now is a risk, and growth will depend on an improvement in drilling conditions. But I think the risk/reward profile is looking stronger than the market is pricing in, and when drilling does recover, this stock will be a big winner for long-term investors.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.

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

Forum Energy Technologies, Inc. Stock Quote
Forum Energy Technologies, Inc.
FET
$25.78 (1.26%) $0.32

*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 08/18/2022.

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.