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TechnipFMC Suffers Market Cap Erosion, To Bear $2.4B Charge

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TechnipFMC plc (FTI - Free Report) recently provided a guidance update on fourth-quarter 2019 segmental operations.

Let’s delve into some key aspects of the company’s regulatory filing.

TechnipFMC envisioned its fourth-quarter non-cash impairment charges to be $2.4 billion, primarily due to sinking market capitalization induced by geopolitical turmoil and softened commodity prices. The company is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry.

Energy Players Write Down Valuable Gas Assets

Apart from TechnipFMC, some industry players suffered huge write-offs in the fourth quarter. CA-based Chevron Corp. (CVX - Free Report) incurred $10.4 billion write-down during the period while maintaining its capital discipline. This adversity majorly resulted from the Appalachian natural gas assets due to the commodity’s price plunge. The energy player is one of the largest publicly-traded oil and gas entities in the world based on proved reserves.

Further, Halliburton (HAL - Free Report) , the world's second-largest oilfield services company after Schlumberger (SLB - Free Report) , reported its post-tax impairment charges of $2.2 billion for the fourth quarter. This write-down is in response to a weak commodity price causing a ramped-down shale activity in North America.

Provision of 2019 Outlook

TechnipFMC estimates its full-year revenues to be 13.5 billion, indicating a movement toward the midpoint of the earlier guided range.

The company is likely to have borne corporate expenses within its previously provided projection of $210-$215 million.

TechnipFMC expects its full-year adjusted EBITDA margin for the Subsea, Onshore/Offshore and Surface Technologies units to meet or exceed the respective past expectation of 11.5%, 16.5% and 10%.

Q4 Earnings Whispers

London-based TechnipFMC is scheduled to release fourth-quarter results on Feb 26, after the closing bell. The current Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at 43 cents per share on revenues of $3.88 billion.

The proven Zacks model does not conclusively predict a beat for TechnipFMC this earnings season. The right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that is not the case here as elaborated below.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: TechnipFMC has an Earnings ESP of -1.86%.

Zacks Rank: TechnipFMC carries a Zacks Rank #3.

The above combination is a spoiler as it leaves surprise prediction inconclusive. You can see the complete list of today’s Zacks #1 Rank stocks here.

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