Fluor shares fall after weaker 3Q earnings report

Fluor shares tumble on weaker 3Q earnings, but analyst still views stock as 'core holding'

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Symbol	Price	Change
FLR	43.09	-0.70

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PITTSBURGH (AP) -- Shares of Fluor Corp. skidded Tuesday, a day after the engineering and construction firm reported an 11 percent drop in third-quarter earnings due to lower revenue at its oil and gas and power units.

The Irving, Texas-based company said Monday it earned $162 million, or 89 cents per share, during the July to September period, compared with $182 million, or $1 per share, in the prior-year period.

Revenue slipped 4 percent to $5.42 billion from $5.67 billion a year earlier. Fluor's power segment and oil and gas unit fell 40 percent and 11 percent, respectively.

Analysts polled by Thomson Reuters forecast a profit of 90 cents per share with revenue of $5.49 billion.

The company said it was awarded $2.88 billion in new projects in the third quarter compared with $8.81 billion in the period a year earlier.

Based on recent cancellations and delays, Fluor trimmed its earnings prediction for the full year to $3.75 to $3.90 per share -- down from its previous forecast of $3.80 to $4.10 per share. Analysts are looking for a profit of $3.85 per share.

For 2010, the company issued weak guidance of $3.20 to $3.60 per share based on recent project delays. But that was in line with Wall Street's forecast of $3.58 per share.

Despite the lower quarterly results, Lazard Capital Markets analyst Graham Mattison wrote that his firm continues to regard Fluor as "one of the best companies in the energy infrastructure sector, and we view the stock as a core holding."

"However, the earnings potential of the company's massive backlog and healthy cash balance are fairly reflected in the share price, in our opinion," he wrote. "Risks include slowing end-market demand, lumpiness of bookings and revenues given large-scale projects, as well as potential for cost overruns on projects."

Shares of Fluor fell $3.26, or 6.8 percent, to $44.75 in afternoon trading.