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Can Fluor (FLR) Keep Earnings Streak Alive in Q1 Earnings?
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Fluor Corporation (FLR - Free Report) is expected to report first-quarter 2017 results, before the opening bell on May 4.
The company posted earnings in the past two quarters, putting a hat-trick of misses to an end. In the last reported quarter, Fluor posted a positive surprise of 2.5%. Overall, the company has an average positive surprise of 3.5%, with two beats for as many misses over the trailing four quarters.
Let's see how things are shaping up for this announcement.
Factors to Consider
Stabilization of commodity prices and gradual improvement in energy/mining customer sentiment are expected to benefit the company’s soon-to-be-recorded quarter. Most analysts believe Fluor’s orders showed signs of bottoming out in the last reported quarter, implying that the figures will likely be better in the first quarter. We believe stability in oil prices and modest recovery in Energy, Chemicals and Mining markets are likely to supplement top-line performance of the soon-to-be-reported quarter.
Passing of Fixing America's Surface Transportation Act (“FAST”) has boosted spending on transportation infrastructure in the U.S., which is a huge positive. Positive industry trends, including uptick in consumer spending and growth in industrial production, are expected to act as tailwinds, thus boosting first-quarter financials. Other growth drivers include rising demand for energy across the globe, lucrative award wins in the company’s Government & Infrastructure segment and market diversity.
In addition, buyout of Dutch engineering and construction company—Stork Holding B.V.—has proved extremely profitable for the company’s “integrated solutions offerings.” During fourth-quarter 2016, Maintenance, Modification and Asset Integrity revenues were up 81.8% on a year-over-year basis, largely benefiting from the Stork buyout. We believe Global Services unit’s top line is expected to benefit from this buyout during first-quarter 2017 significantly.
Despite these positives, it is difficult to ignore the widespread macroeconomic challenges that have severely restricted the company’s performance for the past several quarters. Sluggish backlog conversion problem has been a persistent crisis in this sector, mainly attributable to uncertain macroeconomic conditions. These conditions are likely to thwart growth to a large extent.
In the recent past, Fluor was hurt by lower prices offered by the clients, combined with increased level of irrational bidding in feed pricing. Such factors pose as concerns for the first quarter as well. Other major headwinds include an unimpressive revenue trajectory, uncertain award timing and weak spending on the part of the clients. Also, currency fluctuation and complex stick-built and construction projects are likely to add to the company’s woes.
Earnings Whispers
Our proven model does not conclusively show that Fluor will beat earnings estimates in this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
Zacks ESP: Earnings ESP for the company is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate currently stand at 67 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Fluor has a Zacks Rank #2. Though Zacks Rank #1, 2 and 3 increase the predictive power of the ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
Note that we caution against stocks with Zacks Rank #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
TopBuild Corp (BLD - Free Report) has an Earnings ESP of +5.26% and a Zacks Rank #1.
DragonWave Inc. has an Earnings ESP of +8.82% and a Zacks Rank #2.
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Can Fluor (FLR) Keep Earnings Streak Alive in Q1 Earnings?
Fluor Corporation (FLR - Free Report) is expected to report first-quarter 2017 results, before the opening bell on May 4.
The company posted earnings in the past two quarters, putting a hat-trick of misses to an end. In the last reported quarter, Fluor posted a positive surprise of 2.5%. Overall, the company has an average positive surprise of 3.5%, with two beats for as many misses over the trailing four quarters.
Let's see how things are shaping up for this announcement.
Factors to Consider
Stabilization of commodity prices and gradual improvement in energy/mining customer sentiment are expected to benefit the company’s soon-to-be-recorded quarter. Most analysts believe Fluor’s orders showed signs of bottoming out in the last reported quarter, implying that the figures will likely be better in the first quarter. We believe stability in oil prices and modest recovery in Energy, Chemicals and Mining markets are likely to supplement top-line performance of the soon-to-be-reported quarter.
Passing of Fixing America's Surface Transportation Act (“FAST”) has boosted spending on transportation infrastructure in the U.S., which is a huge positive. Positive industry trends, including uptick in consumer spending and growth in industrial production, are expected to act as tailwinds, thus boosting first-quarter financials. Other growth drivers include rising demand for energy across the globe, lucrative award wins in the company’s Government & Infrastructure segment and market diversity.
In addition, buyout of Dutch engineering and construction company—Stork Holding B.V.—has proved extremely profitable for the company’s “integrated solutions offerings.” During fourth-quarter 2016, Maintenance, Modification and Asset Integrity revenues were up 81.8% on a year-over-year basis, largely benefiting from the Stork buyout. We believe Global Services unit’s top line is expected to benefit from this buyout during first-quarter 2017 significantly.
Despite these positives, it is difficult to ignore the widespread macroeconomic challenges that have severely restricted the company’s performance for the past several quarters. Sluggish backlog conversion problem has been a persistent crisis in this sector, mainly attributable to uncertain macroeconomic conditions. These conditions are likely to thwart growth to a large extent.
In the recent past, Fluor was hurt by lower prices offered by the clients, combined with increased level of irrational bidding in feed pricing. Such factors pose as concerns for the first quarter as well. Other major headwinds include an unimpressive revenue trajectory, uncertain award timing and weak spending on the part of the clients. Also, currency fluctuation and complex stick-built and construction projects are likely to add to the company’s woes.
Earnings Whispers
Our proven model does not conclusively show that Fluor will beat earnings estimates in this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
Zacks ESP: Earnings ESP for the company is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate currently stand at 67 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Fluor Corporation Price and EPS Surprise
Fluor Corporation Price and EPS Surprise | Fluor Corporation Quote
Zacks Rank: Fluor has a Zacks Rank #2. Though Zacks Rank #1, 2 and 3 increase the predictive power of the ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
Note that we caution against stocks with Zacks Rank #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Louisiana-Pacific Corporation (LPX - Free Report) has an Earnings ESP of +27.59% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
TopBuild Corp (BLD - Free Report) has an Earnings ESP of +5.26% and a Zacks Rank #1.
DragonWave Inc. has an Earnings ESP of +8.82% and a Zacks Rank #2.
5 Trades Could Profit ""Big-League"" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>