On Oct 1, 2014, we issued an updated research report on Fluor Corporation (FLR), a leading professional services provider engaged in engineering, procurement, construction and maintenance services. The company has been gaining from the ongoing growth in the petrochemicals and energy sector. However, prevailing weakness in a number of non-energy-related markets and increasing competition are proving to be a drag on the company’s financials.
Fluor, being an industry leader in nuclear remediation at government facilities throughout the U.S., is expected to benefit from the rising energy demand across the globe. With global electricity demand on a steady rise, nuclear energy is emerging as one of the viable alternatives to the world’s dependence on a finite oil supply and the persistent environmental degradation. This apart, the company’s diversity is a key strength that helps it to mitigate the cyclical impacts of the markets in which it operates. Moreover, for the last few quarters, the company has been witnessing strong, new order growth and a robust cash flow, which are likely to be key factors in driving growth, going forward.
However, prevailing weakness in the mining and metals business across the globe is proving to be a headwind for the company, as a major portion of its revenues is sourced from the Industrial & Infrastructure segment. This apart, the company remains prone to the liquidity problems owing to bad debts and cost overruns.
Moreover, Fluor’s margins have been affected by the highly competitive nature of the business. The ongoing consolidation in the engineering and construction industry is likely to give the company a tough ride ahead. Since the beginning of this year, there have been several mergers and acquisitions, the notable among them being the Amec – Foster Wheeler AG (FWLT), General Electric Company (GE) – Alstom and the most recent AECOM Technology Corporation (ACM) – URS Corporation acquisitions.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment