Shares of Fluor Corporation (FLR) reached a 52-week high of $66.83 on Monday, Apr 1, 2013 following its solid fourth quarter 2012 results, strong double-digit growth in Oil & Gas and Global Services and strength in Industrial & Infrastructure segments.
The closing price of the engineering conglomerate on Apr 1, 2013 was $65.44, representing a robust one-year return of about 7.0% and year-to-date return of about 7.3%. Average volume of shares traded over the last three months stood at approximately 1447K.
Fluor delivered a positive earnings surprise in the last four quarters with an average beat of 32.2%. This Zacks Rank #3 (Hold) company has a market cap of $10.6 billion and a long-term expected earnings growth rate of 12.7%.
Solid Fourth Quarter Results
Fluor Corporation reported fourth-quarter 2012 earnings per share from continuing operations of $1.58, well above the Zacks Consensus Estimate of earnings per share of 68 cents.
Total revenue was $7.02 billion in fourth quarter of 2012 compared with $6.25 billion in the fourth quarter of 2011. Consolidated backlog at the end of the year was $38.2 billion compared with $39.5 million at the end of 2011.
Revenue from the Oil & Gas segment was $9.5 billion in 2012, up 19% year over year, driven by new awards and good order backlog. New awards won during the year were approximately $12.6 billion with backlog amounting to $18.2 billion. Petrochemical projects in North America, Europe and Asia aided backlog of the company.
Industrial & Infrastructure revenue was $12.2 billion, an increase of 26% year over year. The rise was due to increased mining and metals business. New awards won during the year were $9.5 billion with backlog amounting to $15.5 billion at the end of the year.
New awards in 2012 were strong at $27.1 billion, compared with bookings of $26.9 billion a year ago, including $12.6 billion in Oil & Gas and $9.5 billion in Industrial & Infrastructure.
Management is positive about an upbeat performance in the year 2013, given its strength in the oil & gas segment and the Industrial Infrastructure segment. Further, the company is strengthening its position in the metals and mining segment (which is included in the Industrial Infrastructure segment).
The company maintained its 2013 earnings per share guidance of $3.85 – $4.35. Fluor derives significant benefits from diverse end-markets.
Series of Contracts for Fluor
On Mar 15, Fluor received a contract from Crosslands Resources, an Australian mining company, to conduct a study regarding the feasibility of the Jack Hills Expansion Project located in Western Australia. Fluor will be responsible for analyzing, upgrading and finalizing the initial analysis of the extensive expansion project of Iron Ore Mine conducted by the Strategic Asset Review department of Fluor. The company is optimistic about this contract and expects it to boost its Metal and Mining business.
On Mar 12, Fluor received a FEED (Front-End Engineering and Design) contract jointly from Qatar Petroleum and Shell for Al-Karaana Petrochemicals Complex in Ras Laffan Industrial City, Qatar. The project is expected to be the foundation for future petrochemical development projects in the Middle East. It will be a world-scale ethane-based cracker and derivatives complex, including two train mono ethylene glycol units using Shell’s proprietary OMEGA (Only MEG Advantaged) technology. Fluor is extremely hopeful that the project will not only strengthen the company’s long-standing relationship with both Qatar Petroleum and Shell but will also realize record revenue growth in the upcoming quarter since the Middle East is an important area of operations for Fluor. This project can prove to be a launch pad for the company’s future business developments in Qatar.
In addition, the company also settled a lawsuit against the company’s management of the Hazardous Materials Management and Emergency Response (:HAMMER) facility.
The Zacks Consensus Estimates for 2013 and 2014 rose 0.2% and 0.6% to $4.17 and $4.70, respectively, in the past 30 days. One estimate moved upward for 2013 and 2014, respectively, over the same time frame.
However, none of the estimates moved downward for 2013 and 2014 in the past 30 days.
We expect the growth in the oil & gas segment and the metals and mining business to be the key drivers for Fluor’s upcoming quarters.
Other Stocks to Consider
Other stocks in the technology industry that are currently performing well and have solid visibility include AECOM Technology Corp. (ACM), Chicago Bridge & Iron (CBI) and Jacobs Engineering Group Inc. (JEC). All these stocks carry a Zacks Rank # 2 (Buy).
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