Stockchase Opinions

Stephen Groff Fluor Corp. FLR-N PAST TOP PICK Jul 12, 2018

(A Top Pick Sep 6/17, Up 28%) He does not like it much anymore and sold it. You have to trust the execution of management. The fact was they had an issue and said it was fixed. They had a follow up issue and then another and he felt it was out of control. It rallied to an attractive sell price.

$48.890

Stock price when the opinion was issued

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TOP PICK

A large E&C firm, very global in nature. For many years, their execution was very good. Has gotten more interested in this, because by being highly diversified, they can tackle the largest and most complicated projects globally. Their challenges are twofold. They are market driven. As an example, their mining backlog has fallen by over 90%. It is cyclical, and is much closer to the bottom that it is to the top. Secondly, they’ve made mistakes with some really shoddy execution in some areas. Dividend yield of 2.1%. (Analysts’ price target is $46.50.)

COMMENT

An engineering company. Has been looking at this for the last few years. He passed on it because about half their business is very much tied to the energy industry. They work on a lot of huge mega projects. Energy prices being low has negatively impacted them. The company has massively missed their guidance continuously, for the last couple of years, including their most recent quarterly earnings. Their backlog is declining. The dividend is probably secure.

DON'T BUY

He still likes it, but with it up 50% in a short period of time he feels there is a lot or optimism build into the price. He feels management has botched 3 or 4 projects. Still a good business, but not a buy at this price.

DON'T BUY

The political risk is prevalent across the industry, as we saw with SNC. There are better opportunities. The business is highly cyclical and subject to government policies. He would stay away, but it is a high quality company in the space.

DON'T BUY

re: Biden infrastrcture plan FLR would benefit from Biden's plan, but FLR wouldn't be his first choice. They've had 3 CEOs in the last 2 years and were the subject of an SEC investigation and had to delay their financial statements. They're getting rid of Stock, a subsidiary. Lots of moving parts here. United Rentals, SNC Lavalin and Jacobs Engineering are better.

TOP PICK

Project management and engineering company. Very strong demand with growing North American economy, Believes old management troubles are behind them. Trading at ~14x earnings, with backlog of projects. Good for long term investors and available at attractive valuation. 

BUY

Likes the space. Broad infrastructure investments in US will support engineering and construction. Continues to like it on fundamentals and valuation.

PAST TOP PICK
(A Top Pick Nov 24/23, Up 38%)

Had a bit of a speed bump a couple years ago with quick CEO successions. Last couple of years have been good. Last earnings report was not great. Revenues missed. Could be due to project decisions were put on hold for the elections due to uncertainty. Watching to make sure it gets back on track. Some concerns but it is a good quality company.

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1550+ opinions with 4.81 rating (one of the best performing expert).

TOP PICK
Stockchase Research Editor: Michael O’Reilly

The world renowned engineering company stock has been sliding, despite recently reporting $1.8 billion net income and  an 11% increase in revenue — which fell marginally short of analyst expectations.  The company has a long runway of projects including a LNG export project in Canada.  It trades at 12x earnings, 1.6x book and supports a robust 72% ROE.  We recommend setting a stop-loss at $29, looking to achieve $52 — upside potential over 40%.  Yield 0%

(Analysts’ price target is $52.89)