Why McDermott's Shares Dropped Today
Mar 1st 2013 5:40PM
Updated Mar 1st 2013 6:45PM
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 drilling platform builder McDermott fell 16% today after the company reported earnings.
So what: Revenue rose 22% in the fourth quarter, to $996 million, which came in ahead of the $980 million estimate from analysts, but the bottom line wasn't as strong. Net income was $40.5 million, or $0.17 per share, which was well below the $0.23 estimate; hence, the fall today.
Now what: The company is being more choosy about the projects it undertakes, which is leading to lower margins, a trend that management expects to continue. Investors were hoping for big things next year, but estimates may have gotten ahead of actual operations. I'd take a cautious approach. McDermott is still profitable, however, so if the stock falls into single digits, it may be worth scooping up for the long-term.
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The article Why McDermott's Shares Dropped Today originally appeared on Fool.com.Fool contributor Travis Hoium has no position in any stocks mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw. 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.
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