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Fluor (FLR) Down 6% Since Earnings Report: Can It Rebound?

FLR

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A month has gone by since the last earnings report for Fluor Corporation (FLR - Free Report) . Shares have lost nearly 6% in the past month, 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 as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Fluor Beats Earnings and Revenue Estimates in Q4

Fluor posted its second consecutive earnings beat as the company’s fourth-quarter 2016 adjusted earnings from continuing operations of $0.82 per share beat the Zacks Consensus Estimate of $0.80 by 2.5%.

Also, the figure rose 20.6% from the prior-year tally of $0.68. Decent top-line growth proved conducive to the earnings performance.

For full-year 2016, Fluor’s adjusted earnings from continuing operations came in at $2.32 per share, down 18.6% from the prior year.

Inside the Headlines

Fourth-quarter revenues came in at $4,989.6 million, up 14.2% year over year. Also, it topped the Zacks Consensus Estimate of $4,834 million. Strong revenue gains from Industrial, Infrastructure & Power and Maintenance, Modification & Asset Integrity segments more than offset the revenue decline at the Energy, Chemicals & Mining segment, thus resulting in sturdy top-line performance.

For full-year 2016, the company’s total sales totaled $19.0 billion, up 5% from the year-ago tally.

Revenues from the Energy, Chemicals & Mining segment continued to decline, falling 11% year over year to $2,509.1 million. Softness in mining activities proved to be an overhang.

Industrial, Infrastructure & Power segment’s revenues posted another sound quarter, with revenues soaring 107.8% year over year to $1,122.9 million. Sales at this segment largely benefited from increased project activity in the power business line.

Revenues at the Government segment were up 7.3% year over year to $694.9 million, mainly on account of profitable project wins and execution.

Maintenance, Modification & Asset Integrity revenues rose an impressive 81.8% to $662.7 million on a year-over-year basis. This segment largely benefited from the Stork buyout that boosted sales at the Global Services unit.

For the reported quarter, Fluor’s new awards were down 64.1% to $2.8 billion on a year-over-year basis. Orders at the Industrial, Infrastructure & Power segment were $1.3 billion, including a contract for the Novo Nordisk active pharmaceutical ingredient facility in North Carolina. The orders in the government business came in at $101 million.

Orders at the Energy, Chemicals & Mining segment totaled $1.06 billion, including the bauxite mine in Guinea. Orders at the Maintenance, Modification & Asset Integrity segment grossed $357 million. Consolidated backlog at the end of the year was $45.0 billion, up from $44.7 billion in the year-ago quarter.

Liquidity & Shares Repurchases

As of Dec 31, 2016, Fluor had cash and marketable securities (including non-current) of $2,105.0 million, down from $2,367.6 million as on Dec 31, 2015. Long-term debt at the end of fourth-quarter 2016 rose to $1,517.9 million from $986.6 million as on Dec 31, 2015.

2017 Guidance

Concurrent with the fourth-quarter 2016 results, the company reiterated its 2017 guidance. For full-year 2017, the company projects earnings per share in the range of $2.75–$3.25. The company believes that most of its opportunities in Infrastructure, Industrial and Government segments will continue to be offset by weak commodity business.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to three lower. In the past month, the consensus estimate has shifted downward by 9.1% 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 great Growth Score of 'A', though it is lagging a lot on the momentum front with a 'D'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% 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 are expecting an inline return from the stock in the next few months.





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