Incorporated in 2000, Houston, Texas-based
FMC Technologies Inc. (
is a leading manufacturer and supplier of technology solutions for
the energy industry. The company, which operates 25 manufacturing
facilities in 15 countries, is engaged in the designing, producing
and servicing technologically sophisticated systems and products
such as subsea production and processing systems, surface wellhead
production systems, high pressure fluid control equipment,
measurement solutions, and marine loading systems for the oil and
gas industry. FMC Technologies divides its business into two
segments: Energy Production Systems and Energy Processing
Capitalizing on the Secular Trend
The growth in global energy demand will continue to boost
drilling activity, with the employment of technology to find and
recover oil/gas resources. As such, opportunities for a global
large-cap oilfield services company like FMC Technologies will also
improve, as it captures the economic benefit of this trend.
Supported by consistency in its earnings/cash flows, attractive
fundamentals and a positive outlook, we remain optimistic on the
firm's near-term prospects. FMC Technologies currently retains a
Zacks #2 Rank, which translates into a short-term Buy rating.
FMC Technologies is particularly well positioned in the subsea
systems market, where it competes with
Cameron International Corp. (
. Subsea activity represents the company's largest and
fastest-growing business, accounting for about 70% of revenue.
Subsea products have seen an increase in interest, and we expect
earnings in this segment to strengthen - especially due to FMC
Technologies' leadership position in subsea production systems,
including subsea trees, controls and manifold and tie-in
Following the Gulf of Mexico oil spill, we expect the company to
benefit from the near-term requirements for better offshore safety
equipments. Stricter regulations on drilling could translate into
enhanced opportunities for subsea equipment suppliers like FMC
With a major portion of its total revenue coming from outside
the U.S., FMC Technologies' international operations are expected
to be a key growth driver going forward and will play an offsetting
role to the relatively soft domestic drilling scene. We have
identified Latin America, Asia Pacific and the Middle East as the
key markets in this regard.
FMC Technologies' strong backlog, which now stands at over $4.6
billion, not only reflects steady demand from its customers but
also offers long-term earnings and cash flow visibility. This
enables the company to navigate uncertainty better than many of its
Recently, FMC Technologies added 15 million shares to its stock
repurchase program, joining many others that are returning cash to
shareholders. We believe the enhanced buyback plan highlights the
oilfield equipment supplier's commitment to create value for
shareholders, while still allowing the flexibility to continue
pursuing growth in its retail and logistics businesses.
All in all, we believe FMC Technologies is favorably positioned
to continue accelerating revenue/earnings growth over the next few
quarters and could be used as a short-term investment.
CAMERON INTL (
): Free Stock Analysis Report
FMC TECH INC (
): Free Stock Analysis Report
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