Fluor (FLR) to Divest Stork European Business to Bilfinger
Fluor Corporation FLR is set to sell its Stork business in Belgium, Germany and the Netherlands along with its U.S. turbo blading manufacturing operation to Bilfinger SE, a Germany-based industrial services provider.
The transaction is processed under the supervision of Lazard, a financial advisory and asset management firm, along with necessary consultations with the representative body of the applicable works councils under various customary conditions. The divestiture is expected to be completed in the first half of 2024, taking Fluor a step further toward focusing on its core businesses and capital priorities.
Furthermore, on Sep 6, 2023, Fluor entered into a settlement agreement with U.S. Securities and Exchange Commission (SEC) regarding the accounting improprieties charges. The SEC investigated the company regarding this matter in 2020 in alignment with two of its large-scale construction projects. To settle this matter, Fluor will have to pay a civil penalty of $14.5 million.
Fluor’s Growth-Driving Initiatives
Fluor focuses on expanding its business portfolio and increasing profitability through various strategic initiatives including accretive acquisitions and valuable divestitures. Also, its efficient service has increased its contract wins over the years. The company is working toward strengthening its market leadership, execution improvement at the project and management levels as well as effective working scenarios with its joint venture partners. These will enable it to accelerate its growth trend in the market.
As a part of its strategic initiative, on Mar 14, 2023, Fluor divested its AMECO South America business, which includes assets in Chile and Peru, to STRACON Group. Previously, it had divested AMECO’s Africa, the Caribbean, Mexico and North America businesses.
During the second quarter of 2023, Fluor witnessed contract wins in all of its reportable segments. Its total new awards for the quarter came in at $3.71 billion compared with $3.55 billion in the year-ago period. This brings the consolidated backlog at the second-quarter end at $25.48 billion. Given the growth trends and backlog level, the company raised its full year 2023 guidance, highlighting its solid prospects.
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Shares of FLR gained 20% in the past three months, outperforming the Zacks Engineering - R and D Services industry’s 7.7% growth.
Zacks Rank
Fluor currently sports a Zacks Rank #1 (Strong Buy).
Other Key Picks
Some other top-ranked stocks from the Construction sector are EMCOR Group, Inc. EME, TopBuild Corp. BLD and Meritage Homes Corporation MTH.
EMCOR currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
EME delivered a trailing four-quarter earnings surprise of 17.2%, on average. Shares of the company have risen 85.2% in the past year. The Zacks Consensus Estimate for EME’s 2023 sales and EPS indicates growth of 11.5% and 35.9%, respectively, from the previous year’s reported levels.
TopBuild currently sports a Zacks Rank of 1. BLD delivered a trailing four-quarter earnings surprise of 14.1%, on average. Shares of the company have risen 55.4% in the past year.
The Zacks Consensus Estimate for BLD’s 2023 sales and EPS indicates growth of 3.3% and 6.1%, respectively, from the previous year’s reported levels.
Meritage Homes currently sports a Zacks Rank of 1. MTH delivered a trailing four-quarter earnings surprise of 24.1%, on average. Shares of the company have gained 75.5% in the past year.
The Zacks Consensus Estimate for MTH’s 2023 sales and EPS indicates decline of 3.2% and 27.3%, respectively, from the previous year’s reported levels.
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