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Should You Steer Clear of Chicago Bridge & Iron for Now?
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Global engineering, procurement and construction conglomerate, Chicago Bridge & Iron Company N.V. has had a dismal year, having declined 17.5% over the past year, which is in stark contrast to the Zacks categorized Building Products - Heavy Construction industry’s average positive return of 28% over the same time frame
Further, the company has recorded a choppy earnings history for the trailing four quarters, having missed estimated twice, along with just one beat, for a negative average surprise of 3.2%.
Chicago Bridge & Iron has also been witnessing some disappointing activity on the earnings estimate revision front. Analysts have revised the Zacks Consensus Estimate for 2016 earnings downward for the past two months, from $4.83 to $4.82, which is a sign of bearish analyst sentiment. The Zacks Consensus Estimate for 2017 has declined from $4.59 to $4.55 over the same time frame.
Like most of the companies operating in the energy domain, particularly the oil and gas sector, volatility in commodity pricing continues to be a major drag for Chicago Bridge & Iron’s profitability. Over the past few quarters, the company witnessed a precipitous decline in capital investments, which has severely marred its financials. In this strained environment, deferred investment decisions may hurt the company’s financials further.
In the third-quarter 2016 results, the company’s revenues fell 16.4% year over year. The dreary top-line performance was driven by considerable weakness across the company’s segments. Also, absence of revenues from the previously divested nuclear operations compounded the fall.
The company also booked fewer new awards, worth $2,716 million during the quarter, compared with $4 billion in the prior-year quarter. The decline was attributable to sustained spending constraints on part of the big clients who continue to defer investments due to softness in energy markets.
We believe that macroeconomic uncertainties and prolonged softness in the energy markets, that are currently plaguing Chicago Bridge & Iron, will sustain in the foreseeable future. These factors affect client spending and consequently Chicago Bridge & Iron’s operations.
Hence, Chicago Bridge & Iron has a Zacks Rank #4 (Sell).
Stocks Worth a Look
Some better-ranked stocks in the broader construction sector include Gibraltar Industries, Inc. (ROCK - Free Report) , United Rentals, Inc. (URI - Free Report) and MasTec, Inc. (MTZ - Free Report) .
Gibraltar Industries is a leading manufacturer and distributor of building products. The company has a striking earnings history, with a remarkable average positive surprise of 67.3%, for the trailing four quarters, driven by four robust beats. The company boasts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
United Rentals, which operates as an equipment rental company, carries a Zacks Rank #2 (Buy). The company has a strong earnings history, having beaten estimates thrice over the trailing four quarters, for an average positive surprise of 7%.
MasTec, an infrastructure construction company, also carries a Zacks Rank #2. It has registered a remarkable positive average surprise of over 61.3% in the four trailing quarters, beating estimates all through.
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Should You Steer Clear of Chicago Bridge & Iron for Now?
Global engineering, procurement and construction conglomerate, Chicago Bridge & Iron Company N.V. has had a dismal year, having declined 17.5% over the past year, which is in stark contrast to the Zacks categorized Building Products - Heavy Construction industry’s average positive return of 28% over the same time frame
Further, the company has recorded a choppy earnings history for the trailing four quarters, having missed estimated twice, along with just one beat, for a negative average surprise of 3.2%.
Chicago Bridge & Iron has also been witnessing some disappointing activity on the earnings estimate revision front. Analysts have revised the Zacks Consensus Estimate for 2016 earnings downward for the past two months, from $4.83 to $4.82, which is a sign of bearish analyst sentiment. The Zacks Consensus Estimate for 2017 has declined from $4.59 to $4.55 over the same time frame.
Like most of the companies operating in the energy domain, particularly the oil and gas sector, volatility in commodity pricing continues to be a major drag for Chicago Bridge & Iron’s profitability. Over the past few quarters, the company witnessed a precipitous decline in capital investments, which has severely marred its financials. In this strained environment, deferred investment decisions may hurt the company’s financials further.
CHICAGO BRIDGE Price and Consensus
CHICAGO BRIDGE Price and Consensus | CHICAGO BRIDGE Quote
In the third-quarter 2016 results, the company’s revenues fell 16.4% year over year. The dreary top-line performance was driven by considerable weakness across the company’s segments. Also, absence of revenues from the previously divested nuclear operations compounded the fall.
The company also booked fewer new awards, worth $2,716 million during the quarter, compared with $4 billion in the prior-year quarter. The decline was attributable to sustained spending constraints on part of the big clients who continue to defer investments due to softness in energy markets.
We believe that macroeconomic uncertainties and prolonged softness in the energy markets, that are currently plaguing Chicago Bridge & Iron, will sustain in the foreseeable future. These factors affect client spending and consequently Chicago Bridge & Iron’s operations.
Hence, Chicago Bridge & Iron has a Zacks Rank #4 (Sell).
Stocks Worth a Look
Some better-ranked stocks in the broader construction sector include Gibraltar Industries, Inc. (ROCK - Free Report) , United Rentals, Inc. (URI - Free Report) and MasTec, Inc. (MTZ - Free Report) .
Gibraltar Industries is a leading manufacturer and distributor of building products. The company has a striking earnings history, with a remarkable average positive surprise of 67.3%, for the trailing four quarters, driven by four robust beats. The company boasts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
United Rentals, which operates as an equipment rental company, carries a Zacks Rank #2 (Buy). The company has a strong earnings history, having beaten estimates thrice over the trailing four quarters, for an average positive surprise of 7%.
MasTec, an infrastructure construction company, also carries a Zacks Rank #2. It has registered a remarkable positive average surprise of over 61.3% in the four trailing quarters, beating estimates all through.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>