Why MRC Global's Shares Dropped

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: Shares of MRC Global fell as much as 16% today after the company said sales will miss expectations.

So what: A regulatory filing today said that line pipe sales in April and May will be about $100 million below expectations. Overall, sales will be down about 10% from a year ago as demand for drilling pipe comes in lower than expected and crude oil pipelines high approval delays.  

Now what: This is bad news for the company's operations and for the full year management expects line pipe sales to be down about $300 million. With the stock trading at 23 times trailing earnings a decline in revenue makes the stock look even more expensive. I see this as a pressure for the company all year and wouldn't consider buying in until we see a pickup in demand in the line pipe business.

Interested in more info on MRC Global? Add it to your Watchlist by clicking here.

The article Why MRC Global's Shares Dropped originally appeared on Fool.com.

Fool contributor Travis Hoium and The Motley Fool have no position in any 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.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

People are Reading