Fluor (FLR) Up 10.2% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Fluor (FLR). Shares have added about 10.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Fluor due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Fluor Q4 Earnings Beat, New Awards & Backlog Up Y/Y

Fluor reported better-than-expected results for fourth-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimate and increased year over year.

During the quarter, the top line of the company grew year over year on the back of solid contributions from the Urban Solutions and Mission Solutions business segments. It has been benefiting from robust end markets, strong client relationships and a resilient capital structure. This growing trend is reflected in solid growth in new awards and backlog value, which are, in turn, solidifying the growth prospects of the company.

Yet, soft contributions from the Energy Solutions segment are concerning along with foreign exchange risks.

Inside the Headlines

Fluor reported adjusted earnings per share (EPS) of 68 cents, which topped the Zacks Consensus Estimate of 56 cents by 21.4%. The reported figure increased from EPS of 43 cents a year ago.

Quarterly revenues of $3.82 billion increased 3% from the year-ago level of $3.71 billion.

Overall, the company’s segment profit was $85 million, reflecting a decline from $174 million a year ago. The segment margin of 2.2% contracted from 4.7% in the year-ago period. Adjusted EBITDA for the reported period was $145 million, up from $136 million in the prior-year period.

Fluor's total new awards in the quarter were $7.61 billion compared with $4.6 billion in the year-ago period. The consolidated backlog at the fourth-quarter end was $29.44 billion, up from $26.05 billion at 2022 end.

Segmental Discussion

The Energy Solutions segment’s revenues declined 19.9% year over year to $1.42 billion in the fourth quarter. The segment margin was 1.8% in the quarter, down from 7% a year ago. New awards were $2.15 billion for the quarter, up from $916 million a year ago. The backlog at the quarter-end was $9.72 billion, up from $9.13 billion at 2022 end.

Revenues in the Urban Solutions segment totaled $1.42 billion, up 29.9% on a year-over-year basis. The segment margin was 10.4% in the quarter, up from 3.5% a year ago. New awards were $5.05 billion for the quarter, up from $3.35 billion a year ago. The backlog at the quarter-end was $14.85 billion, up from $10.27 billion at 2022 end.

Revenues in the Mission Solutions segment totaled $646 million, up 26.9% on a year-over-year basis. The segment margin improved 90 basis points (bps) to 4.8% from the previous year. It booked new awards worth $40 million, up from $36 million a year ago. The backlog at the quarter-end was $3.95 billion, down from $5.67 billion in 2022 end.

The Other segment, which comprises NuScale, generated revenues of $332 million for the fourth quarter, flat year over year. The segment generated a loss of $119 million compared with an $8 million loss a year ago. It booked new awards worth $363 million, up from the year-ago level of $294 million. The backlog at the quarter-end was $926 million compared with $979 million at 2022 end.

2023 at a Glance

In the full year, Fluor reported revenues of $15.47 billion, up 12.6% from $13.74 billion reported in 2022. The adjusted earnings during the year were $2.73 per share, up from 83 cents reported in 2022.

Adjusted EBITDA was also up 87.5% year over year to $613 million, from $327 million.

2024 Guidance

For 2024, Fluor expects adjusted EPS in the range of $2.50-$3.00. The full-year revenues are expected to grow approximately 15% year over year.

It expects adjusted EBITDA to be between $600 million and $700 million. For the year, G&A expenses are expected to be about $190 million.

For 2024, Fluor expects the margin percentage for its segments including Energy Solutions, Urban Solutions and Mission Solutions to be 5%, within 3-4%, and 6%, respectively.

For 2026, it still anticipates adjusted EBITDA in the range of $800-950 million.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

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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.

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