Foster Wheeler AG (FWLT), a global engineering and construction (E&C) firm with leadership in the building of coal-fired burners (CFBs), is scheduled report its fiscal third quarter 2009 financial results on Wednesday, November 4, 2009. In the previous quarter, the company's actual earnings exceeded the market's consensus by 57.3%.
Foster operates in two segments: Global Engineering & Construction and Global Power. The E&C segment builds refineries, delayed coking facilities, petrochemical plants, natural gas liquefaction (LNG) plants, and other related projects. The Global Power is focused on building solid-fuel steam generators, along with the auxiliary equipment, maintenance and services that accompany them.
Foster previously reported revenue of $1,308 million and net income of $127.3 million, or $0.97 per share, compared to revenue of $1,701 million and net income of $74.4 million, or $1.12 per share, in Q2 2008.
In the last five years, the company's Q3 revenues trended up over Q2 revenues. The trend is likely to continue. In fact, the company raised its 2009 margin guidance for its E&C and power segments by 100 basis points and 150 basis points, respectively.
Analysts' estimates for the quarter ending September 2009 (Q3) range from a low of $0.54 to a high of $0.76, with a consensus of $0.626. For the fiscal quarter ending September 2009, the consensus EPS forecast has remained the same over the past week at $0.626 and remained the same over the past month at $0.626. Of the 14 analysts making quarterly forecasts, none raised and none lowered their forecast.
Earnings worm remained sideways in the last month as positive developments in the operating environment are yet provide tangible upside to the company.
Going forward, the bidding environment is very competitive given the slowdown in construction activity, I expect margins to decline further in 2010. However, revenues are expected to show growth due both to organic and inorganic expansion. In fact, the company acquired two companies in 2008. Yesterday, the company completed an acquisition of the majority of the assets of Atlas Engineering, Inc., a Houston-based firm engaged primarily in engineering design, project and construction management services for upstream oil and natural gas production and processing. Atlas offers a natural complement to the subsea/pipeline expertise we gained with the first-quarter 2009 acquisition of the offshore engineering division of OPE Holdings Limited. For the fiscal year ending December 2009, the consensus EPS forecast has decreased over the past week from $2.851 to $2.850 (-0.04%) and decreased over the past month from $2.851 to $2.850 (-0.04%). Of the 8 analysts making yearly forecasts, none raised and 1 lowered their forecast.
The company's stock closed Friday at $27.99, compared to the 52 week range of $12.73 and $35.82. The stock seems to set a new 52 week high soon.
