By and large, investors do well for themselves if they assume that
something that looks too cheap to be believed shouldn't be believed. Of
course, carry that philosophy too far and you miss most of the really
impressive turnarounds and long-term growth stories.
That brings me to Global Power Equipment (GLPW).
This company has been suffering lately from lower service demand and
delayed orders, but nevertheless offers an intriguing mix of sustainable
recurring revenue and leverage to natural gas-fired electricity
generation expansion. A discounted cash flow suggests significant
potential undervaluation, but investors would do well to remember that
many power/utility-focused companies have ultimately disappointed
relative to their long-range forecasts.
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Global Power Equipment Is Either A Big Value Or A Trap
Showing posts with label Babcock Wilcox. Show all posts
Showing posts with label Babcock Wilcox. Show all posts
Sunday, March 10, 2013
Thursday, December 22, 2011
Investopedia: Shaw Has Value, But Needs A Spark
Value traps can drive investors to distraction; nothing is quite as frustrating as owning a quality company but seeing the market ignore its long-term virtues because of short-term challenges. Such could be said for Shaw Group (Nasdaq:SHAW). Although the construction of new nuclear plants looks like a non-starter, the company still has a key position in servicing existing plants, not to mention ongoing opportunities in markets like environmental remediation for utilities and more general industrial and manufacturing construction. The question for investors, though, is how much pain they can tolerate in the short run as capex spending seems to be stuck on pause.
A Decent Start to the Year
Shaw gave some encouragement to its shareholders on Wednesday morning with its earnings release. Revenue fell 2% from the year-ago level, but was in line with analyst expectation. Although the company picked up some business in the Mideast and Latin America, Asia and Europe were notably weaker. Within the segments, not a lot changed - the company's large power business saw revenue fall about 2%, while plant service and environmental/infrastructure traded off above-average and below-average growth.
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A Decent Start to the Year
Shaw gave some encouragement to its shareholders on Wednesday morning with its earnings release. Revenue fell 2% from the year-ago level, but was in line with analyst expectation. Although the company picked up some business in the Mideast and Latin America, Asia and Europe were notably weaker. Within the segments, not a lot changed - the company's large power business saw revenue fall about 2%, while plant service and environmental/infrastructure traded off above-average and below-average growth.
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Tuesday, April 5, 2011
Investopedia: Can EnergySolutions Power Up With Nuclear Energy?
Shakespeare may have thought that it was better to try and fail than to never try at all, but Wall Street is seldom so forgiving. While EnergySolutions (NYSE:ES) has a lot going for it as a very rare pure play on nuclear energy services, the company is going through a difficult adjustment. After trying to compete as a tier-1 player, the company looks to be retrenching, and near-term earnings performance is not looking robust. Nevertheless, patient investors may want to keep an eye on this name as there may be more power to the business than near-term results suggest. (For background reading, check out The Biggest Nuclear Operators In The United States.)
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A Tough End to the Year
Due in part to some accounting readjustments, the fourth quarter of this fiscal year was not very strong for EnergySolutions. Revenue was effectively flat, gross profit was down 15%, and EBITDA fell 6%. None of that is likely to impress analysts, even on an adjusted basis.
Looking around on a division basis does not really help the picture much. The company's international business, its largest component, was basically flat on a revenue basis, but operating income fell more than 20% on lower fees from a major contract. Elsewhere, the commercial services business saw revenue jump, but operating income swung to a loss anyway.
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Wednesday, November 10, 2010
McDermott's New Life
For McDermott (NYSE: MDR), it is now all about energy. With the completion of the Babcock and Wilcox (NYSE: BWC) spinoff at the end of July, McDermott is now an EPCI (engineering, procurement, construction, installation) company with a laser focus on the upstream energy market. In particular, the new company focuses on offshore projects in the Middle East and Asia. If Apache (NYSE: APA), Chevron (NYSE: CVX) or OMV want to build a new offshore installation (whether a production rig, subsea field or floating production system), they hire a company like McDermott to build it.
The First New Quarter In The Books
On the surface, this third quarter was not an auspicious beginning. Revenue dropped 28%, and operating income fell about 14%, though net income from continuing operations was actually up an encouraging 39%. Although there was weak order flow for the quarter, and the company's backlog declined on a sequential and year-over-year basis, McDermott has booked $1.2 billion in new orders for October.
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The First New Quarter In The Books
On the surface, this third quarter was not an auspicious beginning. Revenue dropped 28%, and operating income fell about 14%, though net income from continuing operations was actually up an encouraging 39%. Although there was weak order flow for the quarter, and the company's backlog declined on a sequential and year-over-year basis, McDermott has booked $1.2 billion in new orders for October.
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