URS Shares Dropped: What You Need to Know

Before you go, we thought you'd like these...
Before you go close icon

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: One day after URS Corp. (NYS: URS) reported an 8% rise in second-quarter profit, its share price slipped 10% in early trading today.

So what: The construction company earned $0.86 per share in the quarter, and yes, that was more than it earned last year. Problem was, it wasn't quite enough to satisfy investors' desire for $0.92 per share profit. (Revenue also fell about $100 million short of consensus estimates.)

Now what: At 10 times earnings, and with long-term growth estimates hovering around 11%, URS shares look cheap -- except for one thing. CEO Martin Koffel mentioned in the earnings report that he's confident in URS' ability to grow over the long term through doing "federal and infrastructure work." Show of hands: How many of you out there are confident that a cash-strapped federal government is going to spend all the money that URS hopes to receive?

And there you have it, folks: The second reason for the sell-off.

Want to learn more about URS?Add it to your Fool watchlist.



At the time this article was published Fool contributorRich Smithdoes not own (or short) shares of any stock named above. The Motley Fool has adisclosure policy. Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners