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CBI Hits 52-Week High

Zacks Equity Research

On April 2, shares of Chicago Bridge & Iron Company N.V. (CBI) scaled a new 52-week high of $87.64 per share. The upward momentum in the share price was driven by the company’s strong fundamentals and recent contract wins. The stock has been on uptrend, gaining nearly 10% since it reported strong fourth-quarter 2013 earnings results on Feb 25.

CBI has been benefiting from the rising demand for energy infrastructure, especially in the liquefied natural gas (LNG), gas processing and oil sands markets across the globe. Moreover, the company’s consistent focus on diligent operational execution, safety measures and a unique business model were the other growth drivers.

This Zacks Rank #3 (Hold) company has a broad diversity within the entire energy project spectrum, with a significant portion (approximately 55%) of revenues derived from projects outside the U.S. Moreover, it is one of the few engineering, procurement and construction and process technology contractors with in-house fabrication facilities, which enable it to offer modular construction wherever feasible.

CBI has received a number of lucrative contracts last month. Notably, it was awarded a $40 million front end engineering and design (FEEDQ) and ethylene technology contract from Oman Oil Refineries and Petroleum Industries Company (Orpic) on March 31 for the Liwa Plastics Project based in Oman.

On March 19, the company received a LNG project from Australia-based Bechtel and a pipe fabrication contract from Enterprise Products Partners L.P. (EPD). The aggregate value of the two deals is over $725 million. Also, in a joint venture (:JV) with Chiyoda International Corporation, CBI had received another LNG contract on March 6. LA-based Cameron LNG, LLC, a subsidiary of Sempra Energy (SRE) awarded the $6 billion contract for construction of its Cameron Liquefaction Project in Hackberry.

CBI is a leader in the LNG storage market, where it expects more opportunities for winning contracts, especially in LNG/low temperature storage systems (petrochemicals). These deals are expected to increase the company’s market share in the domain.

For 2014, the Zacks Consensus Estimate for CBI is currently pegged at $5.21 per share, reflecting year-over-year growth of 24.38%. For 2015, the Zacks Consensus Estimate is $5.91 per share, marking year-over-year rise of 13.46%. The expected long-term earnings growth rate for the stock is 14.5%.

Another stock that achieved a new 52-week high recently in the same industry is EMCOR Group, Inc. (EME). The share price of this company was also driven by continued contract wins.

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