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Fluor's (FLR) Stock Up on Q3 Earnings Beat, 2021 View Raised

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Fluor Corporation (FLR - Free Report) reported impressive third-quarter 2021 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while revenues missed the same for four consecutive quarters.

Following the results, shares of the company gained 7.9% during the pre-market trading session on Nov 5.

Elaborating on the quarterly performance, David Constable, chief executive officer of Fluor, said, “This quarter we made significant progress toward our strategic goals, including the reduction of outstanding debt by 30 percent, and have identified a path to over $150 million in annual cost savings.”

Inside the Headlines

Fluor reported adjusted earnings of 23 cents per share, handily beating the Zacks Consensus Estimate of 16 cents by 43.8%.

Quarterly revenues of $3.1 billion missed the consensus mark of $3.31 billion and decreased 10.2% from the year-ago level of $3.46 million. The downside was primarily caused by lower contribution from Urban Solutions and Mission Solutions segments.

Fluor's total new awards for the quarter came in at $3 billion compared with $1.28 billion a year ago. Consolidated backlog at quarter-end came in at $21.03 billion, down from $23.1 billion a year ago.

Fluor Corporation Price, Consensus and EPS Surprise

Fluor Corporation Price, Consensus and EPS Surprise

Fluor Corporation price-consensus-eps-surprise-chart | Fluor Corporation Quote

Segmental Discussion

The company now reports results in four reportable segments as follows: Energy Solutions, Urban Solutions, Mission Solutions and Other.

Energy & Chemicals segment’s revenues grew 2.1% year over year to $1.37 billion for the quarter. The segment reported a profit of $92.5 million, down from $96.2 million a year ago. New awards came in at $644 million, up from $141 million in the third quarter of 2020. Backlog at quarter-end was $9.8 billion compared with $11.6 billion in the year-ago period.

Revenues in the Urban Solutions segment totaled $1 billion, down 23.7% on a year-over-year basis. Segment profit totaled $17.8 million versus $29.3 million a year ago. The downside reflects schedule delays and productivity on a legacy light rail project. New awards came in at $781 million, down from $951 million a year ago. Backlog at quarter-end was $7.8 billion compared with $10.4 billion in third-quarter 2020 due to cancellation of a steel project and continued new award softness.

Revenues in the Mission Solutions segment totaled $723 million, down 8.4% on a year-over-year basis. Nonetheless, the segment reported a profit of $27.9 million compared with $24.5 million a year ago. Results for the quarter reflect increased execution activity on DOE projects, higher-than-anticipated performance-based fees, and the release of COVID-19 cost reserves, offset by a decline in execution activity on army logistics and life support programs in Afghanistan. It booked new awards worth $1.6 billion, significantly up from $188 million a year ago. Backlog at quarter-end was $3.4 billion compared with $3.5 billion in the year-ago period.

The Other segment — comprising NuScale — recognized a loss of $8.2 million for the quarter versus $21.6 million in the year-ago period.

2021 Guidance Raised

For 2021, Fluor now expects adjusted earnings per share in the range of 85 cents to $1.00 compared with 60-80 cents expected earlier. The consensus mark for the same is currently pegged at 72 cents per share.

Zacks Rank

Fluor currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Some better-ranked stocks in the Zacks Construction sector include Sterling Construction (STRL - Free Report) , EMCOR Group, Inc. (EME - Free Report) and North American Construction Group Ltd. (NOA - Free Report) , each carrying a Zacks Rank #2 (Buy).

Earnings for Sterling, EMCOR, and North American Construction are expected to grow 31.6%, 10.2%, and 24.8%, respectively, for the current year.