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Fluor (FLR) Down 17.4% Since Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Fluor Corporation (FLR - Free Report) . Shares have lost about 17.4% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is FLR due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Fluor Misses on Q1 Earnings & Revenues, Cuts View

Fluor reported a net loss of 13 cents per share in first-quarter 2018 comparing unfavourably with net earnings of 43 cents per share in the year ago period. The bottom-line plunge can primarily be attributed to after-tax charge for forecast revisions on a gas-fired power project.

Excluding the charges, the company’s earnings came in at 56 cents, which missed the Zacks Consensus Estimate of 81 cents by 30.9%.

Inside the Headlines

First-quarter revenues came in at $4,823.8 million, lagging the Zacks Consensus Estimate of $4,838 million and were relatively flat year over year. Decline in revenues from Mining, Industrial, Infrastructure & Power and Energy & Chemicals more than offset the revenue gain at the Government and Diversified Services segments.

Revenues at the Government segment soared 73.5% year over year to $1,327.2 million. The improvement in revenues were supported by the execution and substantial completion of task order awards for the U.S. Army Corps of Engineers in Puerto Rico. New awards in the quarter totalled $43 million.

Diversified Services revenues increased 13% to $643.3 million on a year-over-year basis, reflecting growth in revenues from Stork operations in Latin America and North America. The segment’s new awards came in at $433 million.

Meanwhile, revenues from the Energy & Chemicals segment were down 8.7% year over year to $1,943 million. In the reported quarter, the segment booked new awards of $721 million.

Mining, Industrial, Infrastructure & Power segment's revenues recorded a decline of 33.7% year over year to $910.3 million, reflecting lower volume of project execution activities in power.  New awards came in at $1.3 billion including a mine expansion project in Peru.

In the reported quarter, Fluor's total new awards recorded an increase of 9.6% to $2.5 billion on a year-over-year basis.

At the end of the reported quarter, consolidated backlog was $29.1 billion, down from $41.6 billion in the year-ago quarter.

Liquidity & Shares Repurchases

As of Mar 31, 2018, Fluor had cash and marketable securities (including non-current) of $1,828.5 million, down from $2,078.8 million as on Dec 31, 2017. Long-term debt at the end of first-quarter 2018 increased to $1,607.7 million from $1,591.6 million as on Dec 31, 2017.

Furthermore, on May 2, 2018, the company declared a quarterly cash dividend of 21 cents per share payable on Jul 3 to stockholders of record as of Jun 1.

2018 Guidance Cut

Concurrent with first-quarter results, the company revised 2018 guidance. For 2018, it currently projects earnings per share in the range of $2.10-$2.50 compared with its previous guided range of $3.10-$3.50.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter.

Fluor Corporation Price and Consensus

 

Fluor Corporation Price and Consensus | Fluor Corporation Quote

VGM Scores

At this time, FLR has a poor Growth Score of F, a grade with the same score on the momentum front. 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for value based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Interestingly, FLR has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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