Diamonds and Dogs

7/30/12

Lufkin Industries Inc. (LUFK)

Lufkin Industries is crashing and burning today, down 21.37% at $46.65. The oilfield service company saw its shares fall after a poor earnings report was announced. Lufkin's disappointing second-quarter adjusted EPS was $0.66 versus the consensus of $0.82.That factor coupled with a gloomy full-year outlook reinforces concerns over the company's profitability going forward. Management now sees full-year adjusted EPS of $3.00-$3.20, down from its previous view of $3.75-$4.05. CEO John Glick said, "Argentina will continue to be an area of risk so long as the labor unrest and political uncertainty loom around the oil and gas industry in that country." Lufkin lost over $12 today, struggling to stay above their 52-week low.

Shaw Group Inc. (SHAW)

Shaw Group awed investors as it shot up 55.41% at $41.48. Shares of the engineering and construction company popped after Chicago Bridge & Iron agreed to purchase the company for $3 billion in cash and stock. Under the deal, Shaw shareholders will receive $41 in cash and roughly $5 worth of CB&I stock for each share owned, representing a whopping 72% premium to Shaw's closing value on Friday. The combined company will have a global workforce of nearly 50,000 employees, backlog of more than $28 billion, and manufacturing facilities on all continents. CB&I CEO Phillip Asherman said, "Shaw is a great company with tremendously talented employees; by adding them into the CB&I family, we will become fully diversified across the entire energy sector, from Power Generation to LNG, from Refining to Gas Processing, from Offshore to Oil Sands, and beyond." Shaw skyrocketed way above their previous 52-week high.

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