Fluor Corporation (FLR - Free Report) has won a contract from ioneer Ltd. for completion of the Definitive Feasibility Study (“DFS”) for its Rhyolite Ridge Lithium-Boron project in Nevada.
In addition, Fluor will provide engineering, procurement and construction management services (“EPCM”). The project will deliver critical materials, lithium and boron, which are used in everyday items and innovative technologies for ensuring a sustainable future.
Annually, the production of lithium carbonate is expected to be 20,200 tons and that of boric acid is targeted at 173,000 tons. The production is anticipated to start in 2021.
ioneer, being an emerging lithium-boron supplier, has been one of the key clients for Fluor’s Mining, Industrial, Infrastructure & Power segment. Prior to this project, the company helped ioneer to become the world’s largest low-cost lithium producer, while completing the Pre-Feasibility Study (“PFS”).
Fluor has a solid track record of receiving awards, which have helped in generating higher revenues. During the first nine months of 2018, new awards of $10.3 billion for the said segment grew more than three times from the prior-year period. Notably, its recent wins included a copper project in the south of Peru and an international bridge project in Canada.
Notably, shares of Fluor have underperformed its industry in the past three months. The underperformance mainly stemmed from the company’s recently reported dismal third-quarter results. Fluor’s adjusted earnings and revenues missed the Zacks Consensus Estimate by 5.2% and 0.8%, respectively, in the third quarter of 2018. Earnings and revenues also decreased 13.4% and 5.7% year over year, respectively, due to higher tax rate, pre-tax charges on two projects and lower-than-anticipated ramp in mining, infrastructure and energy, and chemicals projects. Meanwhile, lower contribution from Energy & Chemicals and power business lines also added to the woes.
Nonetheless, Fluor remains optimistic about its end markets, including mining. This is because leading indicators of future capital spending like industrial production and capacity utilization are improving in several regions and industries. The company’s Mining & Metal business’ backlog came in at $16.5 billion as of Sep 30, 2018 compared with $10.1 billion a year ago. The significant increase in backlog stemmed from a whopping new awards count, which is expected to generate higher revenues in the future.
Zacks Rank & Stocks to Consider
Currently, Fluor carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same industry are Jacobs Engineering Group Inc. (JEC - Free Report) , KBR, Inc. (KBR - Free Report) and Altair Engineering Inc. (ALTR - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Jacobs’ earnings for the current year are expected to increase 35.2%.
KBR surpassed earnings estimates in three of the past four quarters, delivering average positive surprise of 12.6%.
Altair’s earnings are expected to grow 19.2% in 2018.
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