Fluor Wins Strategic Petroleum Reserve Contract Extension

Shutterstock photo

Fluor Corporation FLR announced that the U.S. Department of Energy or DOE will extend its contract of the U.S. Strategic Petroleum Reserve ("SPR") through March 2024. Fluor initiated management and operation work on the SPR in April 2014 and will book the $2-billion contract extension value in the third quarter of 2018.

In 2013, Fluor Federal Petroleum Operations was selected by the U.S. Department of Energy to manage and operate the SPR. Now, the latest contract extension entails Fluor to continue supporting DOE in the execution of the SPR's life extension engineering and construction initiatives.

Established after the 1973-74 oil embargo, the SPR is the world's prime supply of emergency crude oil situated along the Gulf of Mexico. The federally-owned oil stocks are stored in 63 underground salt caverns in four locations in Louisiana and Texas. Notably, the U.S. President can only decide to withdraw crude oil from the SPR.

Streak of Deal Wins Back Government Business

In July, Fluor's marine propulsion business, Fluor Marine Propulsion LLC, secured a contract from the U.S. Navy for naval nuclear propulsion work at the Naval Nuclear Laboratory. The contract is worth $1.22 billion and incorporates options, which if exercised, would bring the cumulative estimated value of this contract to $13.1 billion.

The company's Government segment, accounting for almost 18% of total revenues, has been performing well courtesy of a solid track record of contracts. Over the past few quarters, major wins in the government business have allowed Fluor to expand its long-term recurring revenue opportunities.

Revenues at the Government segment soared 16% year over year to $863.4 million in the second quarter of 2018. The business received new awards of $742 million in the quarter, including task orders for LOGCAP IV in Afghanistan. The company's quarter-end backlog was $2.3 billion.

Share Price Performance

Shares of Fluor, a Zacks Rank #3 (Hold) stock, have gained 11.6% year to date, while its industry has lost 6.1%. The company has been able to maintain consistent performance banking on its market diversity, a key strength that helps it mitigate the cyclicality of markets wherein it operates. The company's strategy of maintaining a good business portfolio mix permits it to focus on more stable business markets and capitalize on developing the cyclical markets at suitable times.

Stocks to Consider

Some better-ranked stocks in the construction sector are Jacobs Engineering Group Inc. JEC , KBR, Inc. KBR and Gates Industrial Corporation plc GTES , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Jacobs surpassed earnings estimates in each of the trailing four quarters, delivering an average positive surprise of 15.4%.

KBR has a three-five year expected earnings per share growth rate of 8.8%.

Gates Industrial's 2018 earnings are expected to increase 42.2%.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Jacobs Engineering Group Inc. (JEC): Free Stock Analysis Report

Fluor Corporation (FLR): Free Stock Analysis Report

KBR, Inc. (KBR): Free Stock Analysis Report

Gates Industrial Corporation PLC (GTES): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: JEC , FLR , KBR , GTES

More from Zacks.com




Equity Research

Research Brokers before you trade

Want to trade FX?