WASHINGTON INVESTING: Tracing the Causes of BDMÛªs Market Ups and Downs
One of the most puzzling questions about the stock market is why a share of stock can be worth $32 one day but is worth only $22 a few weeks later, even though nothing has happened to alter the companyÛªs financial situation.</br></br>This question comes to mind because of the recent experience of BDM International of McLean, which recently marked its 25th anniversary. BDM is one of WashingtonÛªs top defense contractors, a blue chip company whose profits have grown during the past five years at an annual rate of 28 percent.</br></br>A share of stock, which cost $15.50 when it was first sold in 1980, today would be worth $113.30, adjusted for splits. ThatÛªs an increase of 631 percent or 39 percent a year.</br></br>In 1985, BDM did well. Its revenues hit a record $250 million, while profits totaled $10.5 million. Both were up 31 percent from 1984. President Earle C. Williams called it ÛÏBDMÛªs best year yet.Û</br></br>Then, 1986 rolled in on the heels of a new bull market and the rosy glow got even warmer. BDMÛªs first-quarter earnings, reported in April, were up 34 percent. Second-quarter earnings, published in August, rose 39 percent.