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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (61719)	2/25/2019 1:25:18 PM
From: Paul Senior	1 Recommendation Recommended By E_K_S Read Replies (1) \| Respond to of 78696

MDR (McDermott International) released 4Q results and stock has fallen. From CNBC Shares of McDermott dropped more than 7 percent after the construction company released worse-than-expected fourth-quarter results. McDermott posted a loss of $1.55 per share in the December quarter, while Wall Street had estimated a gain of 17 cents per share. While revenue rose to $2.07 billion from $718 million, it also fell short of expectations. From the company: A $2.2 billion goodwill impairment charge due in part to a change in the Company's cost of capital and risk premium assumptions included in the discount rates utilized to derive the present value of our cash flows. For the full year 2018, the Company reported a net loss of $(2.7) billion, or $(17.94) per diluted share, due primarily to the factors that impacted fourth quarter results... Which wipes out quite a bit of stated book value These construction companies (e.g. Fluor) seem to me to always be having these large impairment charges. So I'll say that stated bv is not a metric to rely on in this type of business. -------------- Anyway, MDR can point to some positives: "Year-end 2018 backlog of $10.9 billion and early Q1 2019 awards of approximately $5.5 billion Continued end-market inflection, as demonstrated by $93.1 billion revenue opportunity pipeline Strong liquidity position, with $1.4 billion of total cash availability at the end of 2018 Integration largely complete, with $444 million of annualized cost synergies actioned; pipe fabrication and tank sale proceeding on schedule Company introduces robust guidance for 2019, with sharply improved key metrics and renewed focus on operational excellence." ------------------- About that guidance: It's "$1.65 to $1.75 adjusted diluted eps". If that range were to in fact happen, then the stock at trades at a multiple of under 5x, which historically, is very low for MDR in the years for which it has reported earnings. I added to my position today. finance.yahoo.com (Stock has recovered from early lows, faster than I could get to get this post out.)