On Jun 6, shares of
Foster Wheeler AG
) scaled a new 52-week high of $34.70 per share. Strategic
initiatives taken by management to improve the company's
fundamentals, healthy order backlogs, new contract wins, strong
performance of Foster Wheeler's Global Engineering and Construction
(E&C) segment and its recent alliance with AMEC plc, fueled the
momentum. The stock returned 46.2% in the 1-year period, higher
than NASDAQ's return of 24.5%.
The company had reported first-quarter 2014 results with
earnings of 19 cents per share, an increase of 5.5% year over year.
However, the earnings fell 47.2% short of the Zacks Consensus
Estimate of 36 cents.
The company has been benefiting from the continuing strength in
the E&C while its Global Power Group also showed signs of
improvement in the quarter. However, adverse tax conditions and
additional asbestos related charges proved to be a drag on the
Following the earnings release, the company's E&C group won
a number of contracts in the past month. Notably, on May 29,
E&C received a contract from Marubeni Corporation for the
KazMunayGaz oil refinery based in Kazakhstan for providing
engineering and material supplies and an air preheating system for
the Terrace Wallsteam reformer heater. Prior to that, on May 20,
the group, in a joint venture received a contract from LNG Canada
Development Inc. for providing FEED and project execution
services for the proposed liquefied natural gas (LNG) export
project, known as the LNG Canada Project, in Kitimat, British
Foster Wheeler has been a market leader in mid-stream and
downstream oil and gas industry, providing it a competitive edge.
However, the company was witnessing urgent need for capacity
additions in a number of developing countries. The company's
proposed acquisition by AMEC, while meeting these requirements,
will also complement its long-term objective of expansion across
diverse sectors including upstream, minerals and metals.
For 2014, the Zacks Consensus Estimate for this stock is
currently pegged at $1.79 per share, which reflects impressive
year-over-year growth of 42.9%. For 2015, the Zacks Consensus
Estimate is $2.24 per share, marking a year-over-year rise of
Foster Wheeler's solid fundamentals continue to aid growth while
keeping up its credibility to earn more deals even after it signed
a definitive sell-off agreement with a rival company. The expected
long-term earnings growth rate for the stock is 12%.
Foster Wheeler currently has a Zacks Rank #3 (Hold). Some
better-ranked stocks in the sector include
Emcor Group Inc.
Sterling Construction Co. Inc.
Tutor Perini Corporation
). All three carry a Zacks Rank #2 (Buy).
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FOSTER WHELR AG (FWLT): Free Stock Analysis
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