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Fluor (FLR) Posts Upbeat Q4 Preliminary Results; Stock Up

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Fluor Corporation FLR recently released upbeat preliminary results for fourth-quarter 2016. The engineering firm expects adjusted net profit from continuing operations of 82 cents per share for fourth-quarter 2016, which exceeds the current Zacks Consensus Estimate of 79 cents for the quarter.

Investors cheered the optimistic guidance and shares inched up 1.2% in the trading session following the announcement. Fluor is set to release its fourth-quarter results on Feb 17.

Quarter to date, the company's shares have outperformed the Zacks categorized Engineering/R&D Services industry. Specifically, the stock has gained 6.7% during this period, compared with an average return of 4.4% for the industry.

Fluor expects to book non-cash charges of $45 million (32 cents per share) for the quarter, owing to the new IRS rules that limit the deductibility of foreign currency translation losses in certain foreign subsidiaries. The company reiterated its 2017 earnings guidance at the previously guided range of $2.75-$3.25 per share.

Fluor enjoys a robust level backlog, with lucrative award wins in Government and Infrastructure, which are likely to act as primary growth drivers in the future. In addition, the company's leading position in nuclear remediation at government facilities throughout the U.S. is encouraging and holds lucrative opportunities for growth.

Fluor also believes that industry infrastructure market will witness significant improvement leading to new award wins and backlog growth, which should contribute to growth over the long term. Based on the forecast of an uptick in consumer spending and growth in industrial production, the company perceives that 2017 will hold better economic prospects than 2016. Investments in infrastructure and higher government spending are anticipated to be the strongest growth drivers for 2016.

Moreover, the company's strategic Stork buyout has proved to be a major profit churner, supplementing growth significantly.

However, huge decline in the prices of crude oil and certain metals have impacted the ability of Fluor's clients to fund new projects. This has affected the company's profitability. Prevailing softness in the mining and metals business continues to dampen lucrative commercial opportunities for the company.

We believe that deferrals in investment decisions by major clients will act as major headwinds, marring the company's near-term prospects. Fluor is also vulnerable to volatile commodity prices, which have been hurting companies operating in the energy domain, particularly the oil and gas sector.

Fluor Corporation Price, Consensus and EPS Surprise

Fluor Corporation Price, Consensus and EPS Surprise | Fluor Corporation Quote

Zacks Rank &Stocks to Consider

Fluor currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader sector include Chart Industries Inc. GTLS , II-VI Incorporated IIVI and Applied Industrial Technologies Inc. AIT .

Chart Industries has generated a positive average earnings surprise of 548.5% in the trailing four quarters, beating estimates all through and currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

II-VI Incorporated, also sporting a Zacks Rank #1, has registered a remarkable positive average surprise of over 59.2% for the four trailing quarters, driven by four remarkable consecutive beats.

Applied Industrial Technologies carries a Zacks Rank #2 (Buy) and has managed to beat estimates thrice in the trailing four quarters, for a positive earnings surprise of 6.2%.

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Fluor Corporation (FLR): Free Stock Analysis Report

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Applied Industrial Technologies, Inc. (AIT): Free Stock Analysis Report

Chart Industries, Inc. (GTLS): Free Stock Analysis Report

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


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

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