Fluor Corporation FLR and its joint venture (“JV”) partner Balfour Beatty Infrastructure, Inc. won a contract from the Texas Department of Transportation (“TxDOT”) to design and reconstruct 11 miles of Interstate 635 LBJ, also known as LBJ Freeway, in Dallas. The total value of the I-635 LBJ East Project is $1.7 billion.
Per the contract, the JV company will enhance effectiveness of the portion of the I-635 loop around north and east Dallas from east of U.S. Highway 75 to I-30. The contract work includes renovation and development of the I-30 interchange and a segment of I-30 from west of Gus Thomasson Road to east of N. Galloway Avenue in Dallas County, TX. Also, the contract incorporates the construction of continuous frontage roads, with improvements of intersections, cross streets and a signature bridge at the Skillman/Audelia intersection.
The main idea behind this enhancement is to boost mobility and safety of the I-635 corridor, as well as reduce traffic congestion in the primary commuter corridor between Dallas and Fort Worth, which carries more than 200,000 vehicles a day.
Fluor is anticipated to book the contract value in its Mining, Industrial, Infrastructure & Power segment in third-quarter 2019. The company has an option of providing capital maintenance services post completion of the project.
Fluor’s Mining, Industrial, Infrastructure & Power Pose Strength
Fluor continues to see opportunities in the infrastructure business. The company’s infrastructure group has been benefitting from new projects that align with its core expertise in the field of large rail and bridge, along with highway projects like the Gordie Howe International Bridge, the LA People Mover and the Boston Green Line Rail Extension.
Notably, in first-quarter 2019, the segment’s revenues grew more than 50% year over year, backed by increased project execution activities. Backlog at the end of the quarter (as of Mar 31, 2019) was $15.1 billion compared with $10.3 billion a year ago. The company continues to track the Oak Hill Parkway project outside of Austin.
Coming to price performance, shares of Fluor have declined significantly by 9.8% so far this year against its industry’s 15% growth. Although the company’s overall business is suffering from reduced volume of project execution, absence of restoration project and cancellation of some large projects in key locations, solid prospects in the Infrastructure & Power business are raising hope. Moreover, it is a great pick in terms of growth investment, supported by a Growth Score of B.
Zacks Rank & Key Picks
Currently, Fluor carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the same space include Altair Engineering Inc. ALTR, AECOM ACM and Quanta Services, Inc. PWR. While Altair sports a Zacks Rank #1 (Strong Buy), both AECOM and Quanta Services carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Altair Engineering, AECOM and Quanta Services’ earnings for the current year are expected to increase 53.7%, 3.7% and 28.8%, respectively.
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