Why MRC Global Stocks Are Falling Today
Shares of Global RCN (MRC -12.75%) had plunged more than 15% as of 1 p.m. ET on Tuesday. Weighing on the oil stocks were its first-quarter results, which came amid a sell-off in the oil market.
MRC Global recorded $742 million in sales during the first quarter, 8% more than last quarter and 22% more than a year ago. Sales were also above analysts’ consensus estimate of $717 million. Earnings also beat expectations, with MRC returning $0.17 per share versus a consensus estimate of $0.15 per share.
The company also raised its forecast for the full year. He now sees sales amounting to $3.1 billion. That’s an improvement on its initial forecast of $3 billion and slightly ahead of the consensus estimate of $3.03 billion. The company noted that it expects revenue from all four business segments to grow by double-digit percentages this year.
Normally, a beat and raise quarter would give the action fuel to rally. However, oil prices fell again today. US oil benchmark West Texas Intermediate fell more than 3% to below $100 a barrel. This is due to lingering demand concerns in China as it battles another pandemic wave. Lower crude prices and demand could impact demand for products distributed by MRC Global, which weighs on its share price.
The market is redefining its expectations these days. For this reason, any hint of potential trouble drives stocks lower. In the case of MRC Global, its shares had risen more than 75% on the year before cooling recently along with crude prices. This cooling phase could continue if crude continues to decline. However, if the current worries fade and crude prices recover, MRC Global shares could join this rebound.