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Flour (FLR) Beats on Q4 Earnings and Revenues

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Headquartered in Irving, TX, Fluor Corporation (FLR - Free Report) provides engineering, procurement, construction and maintenance services (EPCM) through a number of subsidiaries.  The company also provides its operations and maintenance services to major industrial clients.

Fluor’s restructuring initiatives, industry-leading franchise within the U.S., diligent management and proven business model are its key strengths that has been driving growth. Restructuring initiatives, under its construction and fabrication operations, implemented over the past few months are expected to boost key financials.

Fluor has a solid track record of receiving awards which supplements top-line performance. We believe there is a strong potential for margin upside from new awards.

However, on the flip side, sluggish backlog conversion problem has been a persistent crisis in this sector, mainly attributable to uncertain macroeconomic conditions. This implies that the company’s backlog level cannot be regarded as a reliable indicator of earnings growth. Precipitous decline in the prices of crude oil and certain metals has affected the ability of clients to fund new projects. Also, lower prices offered by the clients, combined with increased level of irrational bidding in feed pricing add to its woes.

In the last four trailing quarters, FLR has missed earnings estimates thrice resulting in an average negative surprise of 3.9%.

Currently, FLR has a Zacks Rank #3 (Hold) but that could change following its fourth-quarter 2016 earnings report which has just released. You can see the complete list of today’s Zacks #1 Rank stocks here.

We have highlighted some of the key details from the just-released announcement below.

Earnings: For the fourth-quarter 2016 the company reported adjusted earnings from continuing operations of 82 cents per share, higher the Zacks Consensus Estimate of 80 cents.

Revenues: Revenues came in at $4,989.6 million, above the Zacks Consensus Estimate of $4,834 million.

Key Stats: In 2016, FLR completed the buyout of Stork, incurred an investment of a fabrication facility in China and even submitted NuScale’s small modular reactor application to the NRC. Notably, FLR paid dividends worth $118 million in 2016. The company perceives that these aspects would boost its revenues and profitability in the quarters ahead.

For 2017, FLR anticipates to accrue earnings within the range of $2.75 to $3.25 per share.

Stock Price: FLR shares were inactive in the pre-market trading following the release. It would be interesting to see how the market reacts to the results during the trading session today.

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