FMC Technologies (FTI), oil and gas equipment and services provider, will report its fourth quarter earnings on February 14 after the market closes. The company's earnings are likely to see around 50 percent growth on the back of strong revenue upside. The gross margin as well as operating margins is expected to be better and be the driving force for higher earnings.
Wall Street analysts are estimating the Houston, Texas-based FMC Technologies to report earnings of 51 cents a share on revenues of $1.44 billion for the fourth quarter. This represents 45.7 percent upside on revenue estimation of 30.2 percent growth.
While releasing its fourth quarter results, the company guided fourth quarter earnings to be 46 – 51 cents a share. The company, however, lifted its 2011 earnings outlook to $1.70 - $1.75 a share.
On February 13, Global Hunter Securities downgraded shares of FMC Technologies to Neutral from Buy.
Q3 Results
FMC Technologies reported net income of $121.1 million, up 49.5 percent from $81 million and earnings surged 51.5 percent to 50 cents a share from 33 cents a share in the year-ago quarter. Revenues increased 34 percent to $1.29 billion from $960.0 million in the previous year quarter. Street analysts were estimating the company to earn 46 cents a share on revenues of $1.30 billion.
In the last four quarters, FMC Technologies' earnings swept past analysts' predictions in three quarters and failed to meet analysts' estimations during the first quarter of 2011. The company earned 50 cents a share, 39 cents a share, 32 cents a share and 35 cents a share during the last four quarters.
On the top line side, the company generated revenues of $1.29 billion, $1.23 billion, $1.08 billion and $1.1 billion respectively during the last four quarters.
The company's gross margin showed improvements sequentially in the third quarter to 23.85 percent from 22.42 percent in the second quarter and from 22.11 percent in the first quarter. Similarly, operating margins also witnessed upside to 13.46 percent from 11.18 percent in the second quarter and from 9.93 percent in the first quarter.
For the 12-month trailing period, rival Cameron International Corp. (NYSE: CAM) has healthy gross margin of 30.47 and industry average of 29.91 is also better than FMC Technologies' 23.32 percent. Operating margin of 11.79 percent is better than industry average of 11.22 percent but weaker than CAM's 13.11 percent.
Analyst Take
Analysts seem to be maintaining their opinion in the last two months. While three analysts' are having Strong Buy rating, eight analysts have Buy rating for the shares of FMC Technologies. Significantly, 14 analysts are having Hold rating, whereas 4 analysts' termed the stock as Underperform.
iStock Punch
Though FMC Technologies' gross margin and operating margin showed improvements sequentially, there is still room for the company to improve its operating efficiency for better profitability.