On Mar 13, 2014, we issued an updated research report on
Chicago Bridge & Iron Company N.V.
). The company reported strong fourth-quarter 2014 results, which
included a 2.56% positive surprise. The company also added the
E-Gas Technology business to its portfolio in the last reported
The key drivers behind the company's impressive performance were
increased backlog levels, growing demand for energy across the
globe and CBI's diligent operational execution while remaining
focused on safety. The company's unique business model also aided
CBI has delivered positive earnings surprises in two of last four
quarters, with an average beat of 9.03%.
This Zacks Rank #3 (Hold) company has a broad diversity within
the entire energy project spectrum, with a significant portion
(approximately 55%) of revenues derived from projects outside the
U.S. Moreover, it is one of the few engineering, procurement and
construction and process technology contractors with in-house
fabrication facilities, which enable it to offer modular
construction wherever feasible.
CBI is also a leader in the LNG storage market where it expects
very strong near-term opportunities for winning contracts,
especially in LNG/low temperature storage systems
(petrochemicals), where it plans to gain market share.
However, the company operates in a highly competitive building
and heavy construction industry which has low barriers-to-entry.
Also, there are adequate financial and technical resources
available to the competitors making the competition even
Additionally, the company's long-cycle nature of business
makes it more prone to delays in funds and increases the risk of
bad debts. The time gap between the contract win and payment may
result in significant fluctuations in cash flow and earnings for
CHICAGO BRIDGE (CBI): Free Stock Analysis
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Also, the company's weak cash and balance sheet position could
pose challenges in the near term.
Based on the quarterly performance, CBI reiterated its guidance
for full-year 2014. The company expects revenues in the range of
$12.6-$13.2 billion with adjusted earnings per share (EPS) in the
band of $4.80 to $5.65. The Zacks Consensus Estimate for
2014 earnings is currently toward the higher end of the company's
CBI's performance led to both positive and negative estimate
revisions over the past 30 days. The Zacks Consensus Estimate for
2014 decreased 0.8% and is currently pegged at $5.22 per share.
For 2015, on the other hand, the Estimate rose 2.25% to $5.91,
reflecting scope for the company's growth in the long run. The
expected long-term earnings growth rate for the stock is 14.5%.
Stocks That Warrant a Look
Investors interested in this sector could also consider
Primoris Services Corp.
Quanta Services, Inc.
). All of these have a Zacks Rank #2 (Buy).