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In the last reported quarter, Fluor’s adjusted earnings missed the Zacks Consensus Estimate by 26.3%, but revenues beat the same by 6.3%, respectively. This engineering, procurement, construction and maintenance services provider’s first-quarter 2023 adjusted earnings and revenues grew 75% and 20% year over year, respectively.
Notably, Fluor missed the Zacks Consensus Estimate in all the trailing four quarters, with the average negative surprise being 47.5%.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share (EPS) has remained unchanged at 36 cents over the past 60 days. The estimated figure indicates 176.9% growth from the year-ago EPS of 13 cents. The consensus mark for revenues is $3.61 billion, suggesting a 9.5% year-over-year improvement.
The company’s quarterly performance is likely to have gained from new cost-plus/low-risk bookings, its focus on the “Building a Better Future” strategy and its market diversity. Also, Fluor is the industry leader in nuclear remediation at government facilities throughout the United States. The company is expected to have benefited from the rising demand for energy across the globe. However, Fluor’s solid backlog performance is still affected by a handful of lingering legacy projects.
Segment-wise, our model predicts Energy Solutions revenues (comprising 43% of first-quarter 2023 total revenues) to be $1.60 billion, up 20.4% year over year.
We expect Urban Solutions (comprising 32.2% of first-quarter 2023 total revenues) to be $1.21 billion, up 0.1% sequentially.
Our model predicts Mission Solutions segment revenues (comprising 17.3% of first-quarter 2023 total revenues) to be $596.7 million, up 9.1% year over year.
Other segment (comprising 7.5% of first-quarter revenues) is expected to register 12.4% sequential decline in quarterly revenues.
From the margin perspective, higher overhead costs, additional costs on a legacy infrastructure project, a lack of contractual protection for the supply chain and intense competition are expected to have weighed on the quarterly performance.
We expect the Energy Solutions segment operating margin to be 5.3% in the quarter, up from 4.9% a year ago. For Urban Solutions, our model predicts the operating margin to be 4.4% in the quarter. For Mission Solutions segment, the operating margin is expected to be 4.7% in the quarter, down from 5.1% a year ago.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Fluor for the quarter to be reported. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here, as you will see below.
Earnings ESP: Fluor has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: FLR currently carries a Zacks Rank #3.
Stocks With Favorable Combination
Here are some other companies in the Zacks Construction sector that have the right combination of elements to post an earnings beat on their respective quarters to be reported.
ACM’s earnings topped the consensus mark in all the last four quarters, the average being 4.8%. Earnings for the to-be-reported quarter are expected to increase 10.5% year over year.
Willdan Group, Inc. (WLDN - Free Report) has an Earnings ESP of +108.33% and a Zacks Rank of 3.
WLDN’s earnings for the to-be-reported quarter are expected to increase 300%. The company reported better-than-expected earnings in two of the last four quarters and missed on two occasions, the average surprise being 1,289.3%.
Louisiana-Pacific Corporation (LPX - Free Report) has an Earnings ESP of +5.54% and carries a Zacks Rank of 3.
LPX’s earnings for the to-be-reported quarter are expected to decline 84.7%. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 98.2%.
Image: Bigstock
Factors Setting the Tone for Fluor's (FLR) Q2 Earnings
Fluor Corporation (FLR - Free Report) is scheduled to report second-quarter 2023 results on Aug 4, before market open.
In the last reported quarter, Fluor’s adjusted earnings missed the Zacks Consensus Estimate by 26.3%, but revenues beat the same by 6.3%, respectively. This engineering, procurement, construction and maintenance services provider’s first-quarter 2023 adjusted earnings and revenues grew 75% and 20% year over year, respectively.
Notably, Fluor missed the Zacks Consensus Estimate in all the trailing four quarters, with the average negative surprise being 47.5%.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share (EPS) has remained unchanged at 36 cents over the past 60 days. The estimated figure indicates 176.9% growth from the year-ago EPS of 13 cents. The consensus mark for revenues is $3.61 billion, suggesting a 9.5% year-over-year improvement.
Fluor Corporation Price and EPS Surprise
Fluor Corporation price-eps-surprise | Fluor Corporation Quote
Factors to Note
The company’s quarterly performance is likely to have gained from new cost-plus/low-risk bookings, its focus on the “Building a Better Future” strategy and its market diversity. Also, Fluor is the industry leader in nuclear remediation at government facilities throughout the United States. The company is expected to have benefited from the rising demand for energy across the globe. However, Fluor’s solid backlog performance is still affected by a handful of lingering legacy projects.
Segment-wise, our model predicts Energy Solutions revenues (comprising 43% of first-quarter 2023 total revenues) to be $1.60 billion, up 20.4% year over year.
We expect Urban Solutions (comprising 32.2% of first-quarter 2023 total revenues) to be $1.21 billion, up 0.1% sequentially.
Our model predicts Mission Solutions segment revenues (comprising 17.3% of first-quarter 2023 total revenues) to be $596.7 million, up 9.1% year over year.
Other segment (comprising 7.5% of first-quarter revenues) is expected to register 12.4% sequential decline in quarterly revenues.
From the margin perspective, higher overhead costs, additional costs on a legacy infrastructure project, a lack of contractual protection for the supply chain and intense competition are expected to have weighed on the quarterly performance.
We expect the Energy Solutions segment operating margin to be 5.3% in the quarter, up from 4.9% a year ago. For Urban Solutions, our model predicts the operating margin to be 4.4% in the quarter. For Mission Solutions segment, the operating margin is expected to be 4.7% in the quarter, down from 5.1% a year ago.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Fluor for the quarter to be reported. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here, as you will see below.
Earnings ESP: Fluor has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: FLR currently carries a Zacks Rank #3.
Stocks With Favorable Combination
Here are some other companies in the Zacks Construction sector that have the right combination of elements to post an earnings beat on their respective quarters to be reported.
AECOM (ACM - Free Report) has an Earnings ESP of +1.05% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
ACM’s earnings topped the consensus mark in all the last four quarters, the average being 4.8%. Earnings for the to-be-reported quarter are expected to increase 10.5% year over year.
Willdan Group, Inc. (WLDN - Free Report) has an Earnings ESP of +108.33% and a Zacks Rank of 3.
WLDN’s earnings for the to-be-reported quarter are expected to increase 300%. The company reported better-than-expected earnings in two of the last four quarters and missed on two occasions, the average surprise being 1,289.3%.
Louisiana-Pacific Corporation (LPX - Free Report) has an Earnings ESP of +5.54% and carries a Zacks Rank of 3.
LPX’s earnings for the to-be-reported quarter are expected to decline 84.7%. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 98.2%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.