Opinions
Darren Sissons
Fluor Corp.
FLR-N
DON'T BUY
Nov 06, 2020
Stock price when the opinion was issued
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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.
Premium contentThe 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)Premium contentWe reiterate this global infrastructure company, involved in energy, construction and data centres, as a TOP PICK. It trades at 12x earnings, 1.5x book and supports a robust 72% ROE. We recommend maintaining a tight stop at $29, looking to achieve $47 -- upside potential of 36%. Yield 0.4%
(Analysts’ price target is $47.50)Premium contentPremium contentPremium contentPremium contentPremium contentOur PAST TOP PICK with FLR has triggered its stop at $48. To remain disciplined, we recommend covering the position at this time. Combined with our previous guidance, this will result in a net investment gain of 35%.
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.