Fluor Corporation (FLR - Free Report) announced that it has sold its 50% stake in Seagreen Offshore Wind Farm to SSE Renewables on the successful completion of the development phase of the farm’s first phase. The company was in an equal joint venture with SSE Renewables, a division of Scottish energy company SSE. Seagreen Offshore Wind Farm has the capacity to generate 2.8 gigawatts of energy.
A portion of the proceeds of Seagreen Offshore Wind Farm’s sale has already been assumed in Fluor’s earnings per share guidance for 2018, which is in the range of $2.10-$2.50.
Flour, a leading engineering and construction firm, has been able to deliver consistent performances on the back of diversification that helps it mitigate the cyclicality of markets. The company’s strategy of maintaining a good business portfolio mix allows it to focus on more stable business markets and capitalize on developing the cyclical markets at suitable times.
The company’s impressive performance is evident from its financial results. Earnings in the second quarter of 2018 increased 12.5% on 3.6% year-over-year growth in revenues. The performance was driven by prudent cost management and foreign currency exchange benefits, partly offset by costs related to its downstream and power projects. That said, Fluor continues to see prospects for gradual improvement in core markets, particularly commodity-related, as prices rebound and customer capex recovers.
Meanwhile, stabilizing backlog/bookings is notable. Total backlog came in at $29.3 billion (as of Jun 30) in the second quarter of 2018, up from $29.1 billion in the preceding quarter, marking the first increase since 2016.
Shares of Fluor have gained 40.1%, outperforming the industry’s rise of 3% in a year’s time. Earnings estimates for 2018 and 2019 have moved upward by 4.6% and 3.5%, respectively over the past 60 days, reflecting analyst’s optimism over the company’s growth prospects.
Despite intense competition, the long-term prospects of the company remain strong on the back of existing growth opportunities in renewable energy, gas-fired combined cycle generation and air emissions compliance projects for existing coal-fired power plants.
Zacks Rank & Stocks to Consider
Flour currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Construction sector are KBR, Inc. (KBR - Free Report) , Gates Industrial Corporation plc (GTES - Free Report) and Jacobs Engineering Group Inc. (JEC - Free Report) . While KBR and Gates Industrial sport a Zacks Rank #1 (Strong Buy), Jacobs Engineering carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
KBR reported better-than-expected earnings in all the last four quarters, with the average beat being 12.3%.
Gates Industrial’s 2018 earnings are expected to increase 42.2%.
Jacobs has an expected earnings growth rate of 35.2% for the current year.
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