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Will Fluor (FLR) Surpass Estimates This Earnings Season?

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Fluor Corporation (FLR - Free Report) is scheduled to report first-quarter 2018 results on May 3. In the last reported quarter, the company’s earnings came in at 70 cents per share, reflecting a beat of 11.1%.

We expect Fluor to score an earnings beat in the to-be-reported quarter as well.

Why a Likely Positive Surprise?

Our proven model shows that Fluor is likely to beat estimates this quarter. This is because the stock has the right combination of two ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. This is perfectly the case here as you will see below:

Zacks ESP: Fluor has an Earnings ESP of +2.28% as the Most Accurate estimate of 82 cents is pegged higher than the Zacks Consensus Estimate of 81 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Fluor Corporation Price and EPS Surprise

Fluor Corporation Price and EPS Surprise | Fluor Corporation Quote

Zacks Rank: The company carries a Zacks Rank #2, which when combined with a positive ESP makes us reasonably confident of an earnings beat.

Conversely, we caution against stocks with a Zacks Ranks #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Factors Driving Better-Than-Expected Results

Over the past few quarters, Fluor’s market diversity has remained a key strength and has allowed the company to mitigate the cyclicality of markets in which it operates. In addition, this premium engineering and construction firm’s long-term prospects remain strong backed by existing growth opportunities in renewable energy, gas-fired combined cycle generation and air emissions compliance projects for current coal-fired power plants. Fluor also continues to be optimistic about its investment projects, particularly the LNG projects in North America.

Furthermore, the company has a strong track record of receiving awards, which is anticipated to prove conducive to bottom-line growth in the to-be-reported quarter as well. Meanwhile, Fluor continues to receive awards for FEED and pre-FEED work for gold, bauxite and copper projects. Based on these present trends, the company expects to secure two major EPC mining projects in the next few quarters.

Fluor also remains optimistic about its end markets, including mining. Within the Energy, Chemicals & Mining segment relative stability in commodity prices are likely to boost investments in downstream, petrochemicals and mining. Additionally, commercial markets, including life sciences and infrastructure, are likely to improve going forward. Robust pipeline of work in North America and Europe are expected to be favourable for the company’s Diversified Services business. Further, the company has grown its maintenance, fabrication and construction capabilities as well as invested in its systems and processes that are expected to improve its project delivery.

Given this backdrop, the Zacks Consensus Estimate for first-quarter revenues from the company’s Industrial, Infrastructure and Power segment remains high at $1,050 million, reflecting growth of 4.7% sequentially. Also, the company’s healthy level of backlog in infrastructure, government, life sciences and advanced manufacturing should continue driving profitable growth.

Other Stocks to Consider

Here are some other companies that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this quarter:

Louisiana-Pacific Corporation (LPX - Free Report) has an Earnings ESP of +0.37% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Jacobs Engineering Group Inc. has an Earnings ESP of +0.85% and a Zacks Rank of 2.

AECOM (ACM - Free Report) has an Earnings ESP of +0.46% and a Zacks Rank #3.

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