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TechnipFMC's Stock Is Soaring, But Is It Time to Buy FTI?

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Leading oilfield services provider, TechnipFMC plc (FTI - Free Report) has given an impressive performance over the past year. The company also has strong earnings trends to back up its performance.

This UK-headquartered company, in its current form, came into existence following the January 2017 merger between Technip and FMC Technologies. TechnipFMC is a manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry. It is engaged in designing, producing and servicing technologically sophisticated systems and products for subsea, onshore/offshore, and surface projects.  

Let’s discuss the reasons that make TechnipFMC an attractive pick:

Fundamental Strength Backing FTI Stock

TechnipFMC’s total backlog reached a historic high of $13.9 million in the second quarter of 2024, a 4.51% increase from the previous year. This growing backlog ensures strong revenue visibility and supports margin improvements. The subsea segment, consistently the company's top performer since 2017, is expected to achieve subsea revenue guidance of $7.6 billion to $7.8 billion with an adjusted EBITDA margin of 16.5% to 17%, further solidifying its growth trajectory.

TechnipFMC's strategic expansion in Guyana, driven by long-term partnerships and local workforce development, has positioned the company as the premier supplier of subsea systems and services in the region. With ExxonMobil awarding TechnipFMC all six developments in the Stabroek Block, including over 100 subsea trees delivered, the company's strong regional presence and reputation for meeting accelerated schedules are poised to drive future growth and enhance market positioning.

TechnipFMC believes that its Subsea 2.0 platform — a new, technologically sophisticated suite of products that improves project economics by cutting down on the dimensions of the equipment installed underwater — would enjoy fast-track adoption. The next-generation, environment-friendly all-electric system should increase opportunities further.

TechnipFMC’s Solid Rank and VGM Score

TechnipFMC is a Zacks Rank #2 (Buy) stock. In addition to the favorable rank, FTI enjoys a Value and Growth Score of B and A, respectively, each helping it round out with a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.

Analyst Estimates Raised for FTI

FTI’s earnings revisions have also trended in the right direction over the past 60 days, as analysts have consistently taken up their numbers. The Zacks Consensus Estimate for TechnipFMC’s 2024 bottom line has gone up from a profit of $1.18 to a profit of $1.34 during this timeframe, while the next year’s projection has gone up from a profit of $1.79 per share to $1.88.

Is the Steep Rise a Worry for TechnipFMC Stock?

TechnipFMC shares have surged by more than 300% during the last three years to blow away the S&P 500’s 22.2% gain and the Zacks Oil/Energy sector’s 52.5% growth. FTI has gained roughly 41% during the last 12 months. If the company can continue to beat earnings expectations, as it did in each of the past four quarters, the bulls will likely take the stock even higher.

3-Year Price Comparison
 

Zacks Investment Research Image Source: Zacks Investment Research

FTI Stock Promises Returns

Given this backdrop, it should be prudent to consider buying shares of TechnipFMC. While there are some apprehensions that the company may have gotten too far ahead of itself, the spate of project awards and growing backlog should ensure strong revenue visibility and margin improvements going forward. This suggests strong long-term cash flows that should support higher price points for its shares.

Other Energy Stocks to Buy

Along with TechnipFMC, investors interested in the Oil and Gas - Field Services space might look at operators like Core Laboratories (CLB - Free Report) and Nine Energy Service (NINE - Free Report) , each carrying a Zacks Rank #2 currently.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Core Laboratories: The company’s expected EPS growth rate for three to five years is currently 22.2%, which compares favorably with the industry's growth rate of 14.5%. CLB has a trailing four-quarter earnings surprise of 3.5%, on average.

Core Laboratories is valued at around $889.9 million. CLB has seen its shares decrease 18.3% in a year.

Nine Energy Service: Over the past 60 days, NINE saw the Zacks Consensus Estimate for 2024 move up 10.3%. The oilfield service provider has a Value Score of A.

Nine Energy Services’ current market cap is roughly $50.2 million. NINE has seen its shares drop 73% in a year.


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