Chicago Bridge & Iron Company N.V. CBI recently announced that it has received full notice to proceed from Kazakhstan Petrochemical Industries Inc. (KPI). The full notice to proceed was granted to the company for the project management services for a propane dehydrogenation unit (“PDH”) as well as a polypropylene plant located in Kazakhstan’s western Atyrau region.
Chicago Bridge & Iron’s CATOFIN propane dehydrogenation technology will be used by the PDH unit, while the polypropylene plant will utilize the company's Novolen advanced gas-phase polypropylene technology. The company will provide project management services on the different phases of this project, consequently offering its comprehensive solutions to customers in the region.
Existing Business Scenario
Going forward, Chicago Bridge & Iron estimates multiple opportunities in key end markets including the United States, East Africa and the Middle East. For the United States and Middle East, solid petrochemical investment on ethylene and low feedstock cost are projected to fuel growth. This apart, it has bright prospects in petrochemical projects in the Middle East as well as the U.S. Gulf Coast for both Technology and EPC, going forward. The Zacks Rank #3 (Hold) company has gained 23.5% of its value in past three months, outperforming the industry’s growth of 16.9%.
The company is likely to benefit from President Trump’s “Rebuilding America” rhetoric. We believe that the company’s Engineering and Construction segment will witness a surge in major infrastructure projects, including liquefied natural gas terminals, electric power plant projects, as well as drinking and wastewater pipeline works. Moreover, the company benefits from its diligent execution of strategies, restructuring and cost-saving initiatives culture.
Despite these positives, volatility in commodity pricing continues to be a major drag for Chicago Bridge & Iron’s profitability. Further, over the past few quarters, decreased activity on large cost reimbursable LNG projects in Asia Pacific region, the winding down of several E&C projects along with the timing of progress on projects in Fabrication Services group have remained major concerns for the company.
Stocks to Consider
Some better-ranked stocks from the same space are EMCOR Group, Inc. EME, MasTec, Inc. MTZ and Sterling Construction Company Inc STRL. While EMCOR Group and MasTec sport a Zacks Rank #1 (Strong Buy), Sterling Construction Company carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
EMCOR Group has surpassed estimates thrice in the trailing four quarters, with an average positive earnings surprise of 16.9%.
MasTec has outpaced estimates in the preceding four quarters, with an average earnings surprise of 28.1%.
Sterling Construction Company has surpassed estimates thrice in the trailing four quarters, with an average positive earnings surprise of 65.2%.
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Chicago Bridge & Iron Company N.V. (CBI) : Free Stock Analysis Report
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