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TechnipFMC Stock Up 34% This Year: Will the Trend Hold?
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Oilfield services provider, TechnipFMC plc (FTI - Free Report) has given an impressive performance since the beginning of 2024. Shares have gained 34.4% this year, comfortably outperforming the Oils and Energy sector and the S&P 500. The company is also faring better than its peers like Oceaneering International (OII - Free Report) and Core Labs (CLB - Free Report) .
FTI, OII and CLB Stock Performance Comparison
Image Source: Zacks Investment Research
TechnipFMC Company Profile
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.
Fundamental Strength Backing FTI Stock
TechnipFMC’s total backlog reached a historic high of $13.9 billion 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 open up further opportunities.
TechnipFMC enjoys a Value, Growth and Momentum Score of B, A and B, respectively, each helping it round out with a VGM Score of A.
FTI’s earnings revisions have trended in the right direction over the past 90 days, as analysts have taken up their numbers. The Zacks Consensus Estimate for TechnipFMC’s 2024 bottom line has gone up from a profit of $1.20 to a profit of $1.34 during this timeframe, while the next year’s projection has gone up from a profit of $1.81 per share to $1.89.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
The encouraging outlook for the short term has pushed the FTI stock higher.
TechnipFMC Stock Appears Pricey
For all its fundamental strength and bullishness, TechnipFMC shares seem to be a tad on the expensive side. Going by EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization), the company is trading at a multiple of 10.76, higher than the Zacks Oil and Gas Field Services Industry peers that average 7.19. FTI is also trading at a 29% premium to the subindustry’s forward earnings multiple.
Image Source: Zacks Investment Research
Other Red Flags for FTI Stock
TechnipFMC's dividend yield of 0.74% significantly trails behind industry peers. Additionally, the company's free cash flow of $180.1 million may restrict its ability to enhance shareholder returns through increased dividends or share buybacks. This competitive disadvantage in dividend attractiveness could deter income-focused investors.
TechnipFMC's efforts in developing green energy solutions, such as the Deep Purple technology, remain nascent with no concrete timelines for implementation or scale-up. As the energy sector increasingly shifts toward renewable sources, the company’s slow transition to green technologies may limit its long-term growth potential.
Takeaway: TechnipFMC Stock is a Hold
Given this backdrop, FTI appears to be treading in the middle of the road, and investors could be better off if they trade carefully. Consequently, this might not be the ideal time to invest in the leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry. However, those who already own this stock may stay invested.
TechnipFMC currently carries a Zacks Rank #3 (Hold).
Image: Bigstock
TechnipFMC Stock Up 34% This Year: Will the Trend Hold?
Oilfield services provider, TechnipFMC plc (FTI - Free Report) has given an impressive performance since the beginning of 2024. Shares have gained 34.4% this year, comfortably outperforming the Oils and Energy sector and the S&P 500. The company is also faring better than its peers like Oceaneering International (OII - Free Report) and Core Labs (CLB - Free Report) .
FTI, OII and CLB Stock Performance Comparison
Image Source: Zacks Investment Research
TechnipFMC Company Profile
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.
Fundamental Strength Backing FTI Stock
TechnipFMC’s total backlog reached a historic high of $13.9 billion 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 open up further opportunities.
TechnipFMC’s Solid VGM Score & Northbound Analyst Estimates
TechnipFMC enjoys a Value, Growth and Momentum Score of B, A and B, respectively, each helping it round out with a VGM Score of A.
FTI’s earnings revisions have trended in the right direction over the past 90 days, as analysts have taken up their numbers. The Zacks Consensus Estimate for TechnipFMC’s 2024 bottom line has gone up from a profit of $1.20 to a profit of $1.34 during this timeframe, while the next year’s projection has gone up from a profit of $1.81 per share to $1.89.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
The encouraging outlook for the short term has pushed the FTI stock higher.
TechnipFMC Stock Appears Pricey
For all its fundamental strength and bullishness, TechnipFMC shares seem to be a tad on the expensive side. Going by EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization), the company is trading at a multiple of 10.76, higher than the Zacks Oil and Gas Field Services Industry peers that average 7.19. FTI is also trading at a 29% premium to the subindustry’s forward earnings multiple.
Image Source: Zacks Investment Research
Other Red Flags for FTI Stock
TechnipFMC's dividend yield of 0.74% significantly trails behind industry peers. Additionally, the company's free cash flow of $180.1 million may restrict its ability to enhance shareholder returns through increased dividends or share buybacks. This competitive disadvantage in dividend attractiveness could deter income-focused investors.
TechnipFMC's efforts in developing green energy solutions, such as the Deep Purple technology, remain nascent with no concrete timelines for implementation or scale-up. As the energy sector increasingly shifts toward renewable sources, the company’s slow transition to green technologies may limit its long-term growth potential.
Takeaway: TechnipFMC Stock is a Hold
Given this backdrop, FTI appears to be treading in the middle of the road, and investors could be better off if they trade carefully. Consequently, this might not be the ideal time to invest in the leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry. However, those who already own this stock may stay invested.
TechnipFMC currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank stocks here.