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Fluor (FLR) Hits a 52-Week High: What's Driving Growth?
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Fluor Corporation (FLR - Free Report) touched a new 52-week high of $40.18 on Dec 15. The stock pulled back to end the trading session at $39.37, down 0.76% from the previous day’s closing price of $39.67.
FLR has gained 35.3% in the six-month period compared with the Zacks Engineering - R and D Services industry’s growth of 9.9%, the Zacks Construction sector’s increase of 20% and the S&P 500 Index’s growth of 6.3%.
The price surge can be attributed to the Federal Reserve's recent decision to maintain a steady interest level. The Federal Open Market Committee (FOMC) decided to maintain the interest rates at a 22-year high of 5.25-5.5%. The central bank also hinted at three interest rate cuts by the end of 2024. This is a relief for the housing industry as it suggests stability and affordability for potential homebuyers, boosting home sales and supporting overall industry health.
Image Source: Zacks Investment Research
Moreover, the company is benefiting from its strong backlog and diverse business. Its emphasis on a new strategy, ‘Building a Better Future,’ bodes well.
Let’s discuss the factors favoring this Zacks Rank #3 (Hold) company
Solid Backlog Level a Boon
In the third quarter of 2023, Fluor successfully secured consolidated new awards amounting to $5 billion, aligning with its full-year plan to achieve a book-to-burn ratio exceeding 1. Notably, 94% of these new awards are reimbursable. The total backlog for Fluor stands at $26 billion, with 70% of it being reimbursable. This substantial backlog underscores the continued strong demand for Fluor's services and the recognized value it brings to clients.
FLR's robust prospect pipeline clearly illustrates the demand for its services. The company is currently monitoring potential projects, exceeding its existing backlog by more than 15 times. Key opportunities driving this demand include the chemicals sector, closely followed by fuel production and mining and metals.
Strengthening Business Through Diversity
FLR's strategy involves maintaining a balanced business portfolio, prioritizing stable markets and seizing opportunities in cyclical markets. The ongoing transformation of its EPC model into an integrated solution aims to broaden project scope, enhance client satisfaction and boost returns. Fluor plans to implement data analytics to minimize risks and maximize returns, providing FLR with a competitive edge and distinct advantage.
The company's long-term outlook also remains strong, supported by growth opportunities in renewable energy, gas-fired combined cycle generation and air emissions compliance projects for existing coal-fired power plants. For 2026, it anticipates adjusted earnings of $3.10-$3.60 per share and adjusted EBITDA in the range of $800-950 million.
Emphasis on Refined Strategy
FLR is implementing a new strategy, ‘Building a Better Future,’ with four key priorities to enhance shareholders’ value. Firstly, the company aims to drive growth in diverse markets, including energy transition, advanced technology, life sciences, high-demand metals, infrastructure and mission solutions. Secondly, FLR seeks contracts with fair and balanced terms, avoiding competitive fixed-priced EPC in the Energy & Chemicals segment and being selective in Infrastructure. This reflects a shift from the previous high-risk, high-margin strategy. Thirdly, the focus is on maintaining financial discipline and ensuring a solid balance sheet through predictable cash flow and earnings. Lastly, FLR is committed to fostering a high-performance culture with a focus on diversity, equity, inclusion and social progress, aligning with its sustainability goals.
Key Picks
Some better-ranked stocks from the Zacks Construction sector are:
The Zacks Consensus Estimate for EME’s 2023 sales and earnings per share (EPS) suggests growth of 12% and 52.8%, respectively, from the year-ago period’s levels.
M-tron Industries, Inc. (MPTI - Free Report) currently sports a Zacks Rank of 1. MPTI delivered a trailing four-quarter earnings surprise of 35.6%, on average. It has surged 219.9% in the past year.
The Zacks Consensus Estimate for MPTI’s 2023 sales and EPS indicates growth of 30.6% and 156.7%, respectively, from the previous year’s levels.
AECOM (ACM - Free Report) carries a Zacks Rank of #2 (Buy). It has a trailing four-quarter earnings surprise of 2.1%, on average. Shares of ACM have surged 11.4% in the past year.
The Zacks Consensus Estimate for ACM’s 2024 sales and EPS indicates an increase of 4.5% and 17.5%, respectively, from the year-ago period’s levels.
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Fluor (FLR) Hits a 52-Week High: What's Driving Growth?
Fluor Corporation (FLR - Free Report) touched a new 52-week high of $40.18 on Dec 15. The stock pulled back to end the trading session at $39.37, down 0.76% from the previous day’s closing price of $39.67.
FLR has gained 35.3% in the six-month period compared with the Zacks Engineering - R and D Services industry’s growth of 9.9%, the Zacks Construction sector’s increase of 20% and the S&P 500 Index’s growth of 6.3%.
The price surge can be attributed to the Federal Reserve's recent decision to maintain a steady interest level. The Federal Open Market Committee (FOMC) decided to maintain the interest rates at a 22-year high of 5.25-5.5%. The central bank also hinted at three interest rate cuts by the end of 2024. This is a relief for the housing industry as it suggests stability and affordability for potential homebuyers, boosting home sales and supporting overall industry health.
Image Source: Zacks Investment Research
Moreover, the company is benefiting from its strong backlog and diverse business. Its emphasis on a new strategy, ‘Building a Better Future,’ bodes well.
Let’s discuss the factors favoring this Zacks Rank #3 (Hold) company
Solid Backlog Level a Boon
In the third quarter of 2023, Fluor successfully secured consolidated new awards amounting to $5 billion, aligning with its full-year plan to achieve a book-to-burn ratio exceeding 1. Notably, 94% of these new awards are reimbursable. The total backlog for Fluor stands at $26 billion, with 70% of it being reimbursable. This substantial backlog underscores the continued strong demand for Fluor's services and the recognized value it brings to clients.
FLR's robust prospect pipeline clearly illustrates the demand for its services. The company is currently monitoring potential projects, exceeding its existing backlog by more than 15 times. Key opportunities driving this demand include the chemicals sector, closely followed by fuel production and mining and metals.
Strengthening Business Through Diversity
FLR's strategy involves maintaining a balanced business portfolio, prioritizing stable markets and seizing opportunities in cyclical markets. The ongoing transformation of its EPC model into an integrated solution aims to broaden project scope, enhance client satisfaction and boost returns. Fluor plans to implement data analytics to minimize risks and maximize returns, providing FLR with a competitive edge and distinct advantage.
The company's long-term outlook also remains strong, supported by growth opportunities in renewable energy, gas-fired combined cycle generation and air emissions compliance projects for existing coal-fired power plants. For 2026, it anticipates adjusted earnings of $3.10-$3.60 per share and adjusted EBITDA in the range of $800-950 million.
Emphasis on Refined Strategy
FLR is implementing a new strategy, ‘Building a Better Future,’ with four key priorities to enhance shareholders’ value. Firstly, the company aims to drive growth in diverse markets, including energy transition, advanced technology, life sciences, high-demand metals, infrastructure and mission solutions. Secondly, FLR seeks contracts with fair and balanced terms, avoiding competitive fixed-priced EPC in the Energy & Chemicals segment and being selective in Infrastructure. This reflects a shift from the previous high-risk, high-margin strategy. Thirdly, the focus is on maintaining financial discipline and ensuring a solid balance sheet through predictable cash flow and earnings. Lastly, FLR is committed to fostering a high-performance culture with a focus on diversity, equity, inclusion and social progress, aligning with its sustainability goals.
Key Picks
Some better-ranked stocks from the Zacks Construction sector are:
EMCOR Group, Inc. (EME - Free Report) sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 25%, on average. Shares of EME have surged 47.4% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for EME’s 2023 sales and earnings per share (EPS) suggests growth of 12% and 52.8%, respectively, from the year-ago period’s levels.
M-tron Industries, Inc. (MPTI - Free Report) currently sports a Zacks Rank of 1. MPTI delivered a trailing four-quarter earnings surprise of 35.6%, on average. It has surged 219.9% in the past year.
The Zacks Consensus Estimate for MPTI’s 2023 sales and EPS indicates growth of 30.6% and 156.7%, respectively, from the previous year’s levels.
AECOM (ACM - Free Report) carries a Zacks Rank of #2 (Buy). It has a trailing four-quarter earnings surprise of 2.1%, on average. Shares of ACM have surged 11.4% in the past year.
The Zacks Consensus Estimate for ACM’s 2024 sales and EPS indicates an increase of 4.5% and 17.5%, respectively, from the year-ago period’s levels.