Engineering / infrastructure firm
Fluor (FLR) is one of those few stocks that could head to a remote island for a decade, come back in 2019, and the company would be executing and thriving. However, it's business - dependent on large projects - is quite lumpy from quarter to quarter, and it has been struggling of late. You can see while the market has had an upward bias, the stock has been in a downturn for a good 2 months, signaling "those in the know" *knew*, and were exiting stage right.
The engineering and construction firms are definitely MID to LATE cycle, not early cycle recovery... so for companies in this sector, there time will be in the future. Fluor and
Jacobs Engineering Group (JEC) remains the cream of the crop in this group and for those with multi year time horizons probably begin to present some compelling valuations.
Fluor reported last night, and disappointed with lowered guidance; a bit of a surprise because management is very good at low balling and beating i.e. playing the Wall Street game. Frankly, I cannot remember them missing like this in the past 3 years at least. 2010 estimates for earnings are also tagged to be lower than 2009. So green shoots of recovery have yet to truly manifest in this group - new project awards were quite weak at $2.9 Billion versus nearly $9 Billion a year ago. Full
report here... some quick observations below.
Via
Reuters:
- Fluor Corp (FLR) posted a lower quarterly profit as energy project spending slowed with the drop in oil and gas prices, and the largest publicly traded U.S. engineering company forecast weaker profits for this year and 2010.
- Third-quarter net profit fell to $162 million, or 89 cents per share, from $182 million, or $1.00 per share, in the same quarter a year before. Revenue fell 4 percent to $5.42 billion. Analysts had expected 90 cents per share on revenue of $5.49 billion.
- Backlog at the end of the third quarter fell to $28 billion, versus $30.9 billion three months before and down 23 percent from a year ago, the company said on Monday. Fluor removed $1.2 billion from its backlog due to an indefinitely delayed Russian gas processing expansion.
