Why Fluor Stock Rocked the Market Today
Key Points
This was bolstered considerably by a jump in the level of new awards.
They more than tripled year over year.
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Engineering and construction conglomerate Fluor (NYSE: FLR) engineered an impressive gain for its stock as the trading week came to a close. That's another way of saying that it posted a very strong set of second-quarter results, which were encouraging enough to propel its shares to a nearly 17% gain on Friday.
The fundamentals flew well higher
Before market open, Fluor reported that its revenue for the period was $4.3 billion, up a sturdy 9% year over year. That was helped to no small degree by the company's more than tripling its new awards to $6.1 billion from $1.8 billion in the year-ago quarter.
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Net income not under generally accepted accounting principles (non-GAAP, or adjusted) leaped even higher, advancing by 79% to $129 million, or $0.91 per share.
That meant a pair of crushing beats for Fluor, as analysts tracking the stock were collectively modeling revenue of a bit over $3.9 billion and adjusted net profit of $0.70 per share.
In its earnings release, Fluor quoted CEO Jim Breuer as saying that the new business the company attracted shows "the successful pull-through of our front-end work and the confidence clients have in Fluor to advance their most important investments."
New awards bring new optimism
Although Fluor did not provide revenue or bottom-line guidance, it modified its existing forecast for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).
Although it shaved the top end of this to $525 million from $560 million, it reflects the divestment in the company's share of the ICA Fluor joint venture in Mexico. The bottom end of the range was maintained at $500 million.
In my view, investors were right to be so bullish on the company post-earnings. I'm particularly impressed by that leap in new awards, which clearly shows the company knows how to expand its business by one of the best methods possible. I think this stock has more potential upside.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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