Back to top

Analyst Blog

Foster Wheeler AG(FWLT - Analyst Report) is set to report its first quarter 2013 results on May 2. Last quarter, it posted a 17.4% negative surprise. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Foster Wheeler reported weak fourth quarter 2012 results compared to a reasonably strong fourth quarter of 2011. The company reported a 30.8% decline in adjusted earnings per share and the backlog also dropped on a year-over-year basis.  The decline was mainly because of missing out on key dates for committed projects. Further, power generation markets globally continue to be relatively weak. Unstable environmental regulations in Europe coupled with low natural gas prices in the U.S. have delayed or dampened the retrofit markets. In addition, the markets for renewable power have been depressed in many regions due to overbuilding during the past decade and current government reluctance to continue subsidization.


Earnings Whispers?


Our proven model does not conclusively show that Foster is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Positive Zacks ESP:  That is because the Most Accurate Estimate stands at $0.15 while the Zacks Consensus Estimate is lower at $0.17. That is a difference of -11.8%.

Zacks #5 Rank (Strong Sell). Foster’s Zacks #5 Rank (Strong Sell) lowers the predictive power of ESP because the Zacks #5 Rank when combined with a negative ESP makes surprise prediction difficult. We caution against stocks with Zacks #4 and #5 Ranks (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

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

AECOM Technology Corporation(ACM - Analyst Report) with Earnings ESP of 1.92% and a Zacks #2 Rank (Buy)

ChicagoBridge& Iron(CBI - Analyst Report) with Earnings ESP of 1.33% and a Zacks #2 Rank (Buy)

KBR Inc.(KBR) with Earnings ESP of 1.79% and a  Zacks #3 Rank (Hold)

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ERBA DIAGNO… ERB 3.00 +3.09%
SANCHEZ ENE… SN 34.18 +2.67%
PANTRY INC PTRY 21.02 +2.09%
INTEL CORP INTC 35.15 +1.88%
PIPER JAFFR… PJC 54.54 +1.70%