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Why Is Fluor (FLR) Down 8.7% Since the Last Earnings Report?
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It has been about a month since the last earnings report for Fluor Corporation (FLR - Free Report) . Shares have lost about 8.7% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Fluor's Q1 Earnings Miss, Revenues Beat, View Cut
Fluor’s first-quarter 2017 earnings (excluding non-recurring costs) came in at $0.57 per share, missing the Zacks Consensus Estimate of $0.67 by 14.9%. On a reported basis, the company’s EPS plunged 41.9% to $0.43 from the year-ago figure of $0.73.
Shift from higher-margin engineering activities to lower-margin construction activities is mainly responsible for this earnings plunge. Further, pre-tax charge for unanticipated cost increases in Industrial, Infrastructure and Power segment projects, and a pre-tax foreign exchange expense also restricted earnings growth.
Inside the Headlines
First-quarter revenues came in at $4,835.9 million, surpassing the Zacks Consensus Estimate of $4,789 million by a small margin and up 9.3% year over year. Strong revenue gains from Industrial, Infrastructure and Power, and Diversified Services more than offset the revenue decline at the Energy, Chemicals and Mining segment, resulting in a sturdy top-line performance.
Revenues from the Energy, Chemicals and Mining segment continued to decline, down 5.8% year over year to $2,302.2 million. Factors including reduced volume of project execution activities for certain large chemicals projects proved to be major dampeners for this segment.
Industrial, Infrastructure and Power segment’s revenues posted another sound quarter, with revenues soaring 43.9% year over year to $1,199.3 million. Sales at this segment largely benefited from increased project execution activities for several power projects, including two nuclear projects for Westinghouse and two gas-fired power plants in the southeastern United States.
Revenues at the Government segment were up 11.6% year over year to $765.2 million, on the back of higher project execution activities for the Idaho Cleanup Project Core Contract (“Idaho Core Project”) and construction services projects.
Diversified Services revenues rose an impressive 23.4% to $569.2 million on a year-over-year basis. This segment largely benefited from the Stork buyout.
For the reported quarter, Fluor’s new awards were down 51.1% to $2.3 billion on a year-over-year basis. Orders at the Industrial, Infrastructure and Power segment were $777 million, including the A10 Zuidasdok motorway project in the Netherlands. The orders in the government business came in at $173 million, including the multi-year services contract and additional funding for the Paducah Gaseous Diffusion Plant project.
Orders at the Energy, Chemicals and Mining segment totaled $817 million. Orders at the Diversified Services segment grossed $546 million.
Consolidated backlog at the end of the quarter was $41.7 billion, down from $46.0 billion in the year-ago quarter. Adjustments made for a liquefied natural gas project in Canada and limiting the contractual term of the Magnox RSRL Project eroded the backlog.
Liquidity
As of Dec 31, 2017, Fluor had cash and marketable securities (including non-current) of $2,180.9 million, up from $2,105.0 million as on Dec 31, 2016. Long-term debt at the end of first-quarter 2017 rose to $1,526.0 million from $1,517.9 million as on Dec 31, 2016.
2017 Guidance Cut
Concurrent with the first-quarter 2017 results, the company slashed its 2017 guidance. The company currently projects earnings per share in the range of $2.25–$2.75 compared to the previous range of $2.75–$3.25 per share. The downward guidance revision is mainly attributable to risks associated with the pace of new awards and a waning revenue trajectory. Volatility in commodity prices also adds to the company’s woes.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter. In the past month, the consensus estimate has shifted lower by 19.2% due to these changes.
At this time, Fluor's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
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Why Is Fluor (FLR) Down 8.7% Since the Last Earnings Report?
It has been about a month since the last earnings report for Fluor Corporation (FLR - Free Report) . Shares have lost about 8.7% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Fluor's Q1 Earnings Miss, Revenues Beat, View Cut
Fluor’s first-quarter 2017 earnings (excluding non-recurring costs) came in at $0.57 per share, missing the Zacks Consensus Estimate of $0.67 by 14.9%. On a reported basis, the company’s EPS plunged 41.9% to $0.43 from the year-ago figure of $0.73.
Shift from higher-margin engineering activities to lower-margin construction activities is mainly responsible for this earnings plunge. Further, pre-tax charge for unanticipated cost increases in Industrial, Infrastructure and Power segment projects, and a pre-tax foreign exchange expense also restricted earnings growth.
Inside the Headlines
First-quarter revenues came in at $4,835.9 million, surpassing the Zacks Consensus Estimate of $4,789 million by a small margin and up 9.3% year over year. Strong revenue gains from Industrial, Infrastructure and Power, and Diversified Services more than offset the revenue decline at the Energy, Chemicals and Mining segment, resulting in a sturdy top-line performance.
Revenues from the Energy, Chemicals and Mining segment continued to decline, down 5.8% year over year to $2,302.2 million. Factors including reduced volume of project execution activities for certain large chemicals projects proved to be major dampeners for this segment.
Industrial, Infrastructure and Power segment’s revenues posted another sound quarter, with revenues soaring 43.9% year over year to $1,199.3 million. Sales at this segment largely benefited from increased project execution activities for several power projects, including two nuclear projects for Westinghouse and two gas-fired power plants in the southeastern United States.
Revenues at the Government segment were up 11.6% year over year to $765.2 million, on the back of higher project execution activities for the Idaho Cleanup Project Core Contract (“Idaho Core Project”) and construction services projects.
Diversified Services revenues rose an impressive 23.4% to $569.2 million on a year-over-year basis. This segment largely benefited from the Stork buyout.
For the reported quarter, Fluor’s new awards were down 51.1% to $2.3 billion on a year-over-year basis. Orders at the Industrial, Infrastructure and Power segment were $777 million, including the A10 Zuidasdok motorway project in the Netherlands. The orders in the government business came in at $173 million, including the multi-year services contract and additional funding for the Paducah Gaseous Diffusion Plant project.
Orders at the Energy, Chemicals and Mining segment totaled $817 million. Orders at the Diversified Services segment grossed $546 million.
Consolidated backlog at the end of the quarter was $41.7 billion, down from $46.0 billion in the year-ago quarter. Adjustments made for a liquefied natural gas project in Canada and limiting the contractual term of the Magnox RSRL Project eroded the backlog.
Liquidity
As of Dec 31, 2017, Fluor had cash and marketable securities (including non-current) of $2,180.9 million, up from $2,105.0 million as on Dec 31, 2016. Long-term debt at the end of first-quarter 2017 rose to $1,526.0 million from $1,517.9 million as on Dec 31, 2016.
2017 Guidance Cut
Concurrent with the first-quarter 2017 results, the company slashed its 2017 guidance. The company currently projects earnings per share in the range of $2.25–$2.75 compared to the previous range of $2.75–$3.25 per share. The downward guidance revision is mainly attributable to risks associated with the pace of new awards and a waning revenue trajectory. Volatility in commodity prices also adds to the company’s woes.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter. In the past month, the consensus estimate has shifted lower by 19.2% due to these changes.
Fluor Corporation Price and Consensus
Fluor Corporation Price and Consensus | Fluor Corporation Quote
VGM Scores
At this time, Fluor's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.