The market giveth and the market taketh away -- all in the same day. I was looking at how Shaw Group (NYSE: SGR) performed on Thursday. The company, an engineering firm that provides services relating to the energy and environmental industry for both the government and the private sector, was up 5.6% at the close of trading yesterday, powered by superb volume. But, in the after-hours session, it went down nearly 6.4%.
And, yes, the sell-off was on the back of an earnings report. For the third quarter, Shaw Group made 57 cents per share, excluding its acquisition of Westinghouse. The company made 67 cents per share in last year's similar quarter, also adjusted for the acquisition. Net sales were essentially flat.
According to The Wall Street Journal, analysts were looking for 60 cents per share. The miss, as well as the not-so-awesome outlook, obviously gave traders an excuse to sell. Shaw Group, however, represents an interesting long-term investment thesis, as it is a play on nuclear energy.
Nuclear power is certainly controversial. But so are other forms of energy. Coal is unpopular because of its negative environmental effect. Steven Halpern highlighted analyst commentary during the election season last fall on what role Shaw Group might play when it comes to energy solutions.
Personally, I do like the potential future of the company, as it has a lot going on for itself, but I'd rather have a look at the price action to guide me, at least for the short-term. The stock has been volatile over the past year, and it hasn't been a great investment for those who didn't time their buys correctly. And, speaking for myself, I just don't feel the timing is right to start a position in Shaw Group. The stock has trended down in the last month, and with the after-hours sell-off on Thursday, I'm inclined to skip the company for now. I'll check it again in the future, but I'll be curious to see where it closes at the end of the day on Friday.
Disclosure: I don't own any company mentioned; positions can change without notice.
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