Chicago Bridge & Iron Company N.V. CBI recently clinched technology contracts from four PetroChina refineries for the license, engineering design and proprietary equipment supply for an alkylation unit at each of the four sites.
These sites are located in Dalian, Liaoning Province; Jilin City, Jilin Province; Jinzhou, Liaoning Province; and Urumqi, Xinjiang Uygar Autonomous Region.
Chicago Bridge & Iron’s premium solution, the CDAlky advanced sulfuric acid alkylation technology, will be used by all the alkylation units for the production of high-octane alkylate at minimal environmental impact.
Earlier this month, the company won a contract from Técnicas Reunidas, S.A. for new product storage tanks for Saudi Aramco's refinery in Ras Tanura, Saudi Arabia.
Despite such lucrative contract wins, Chicago Bridge & Iron has been treading rough waters in recent times. Investors have been shunning the stock after the company reported dreary Q2 results, issued bleak guidance and suspended its dividend. The company has slumped hard over the past one year, having declined 60.3%, significantly wider than the industry’s average decline of 0.9%.
Like most other companies operating in the energy domain (particularly the oil and gas sector), volatility in commodity pricing continues to be a major drag on Chicago Bridge & Iron’s profitability. Over the past few quarters, the company witnessed a precipitous decline in capital investments that has severely hit its financials.
Decreased activity on large cost reimbursable LNG projects in Asia Pacific region, the winding down of several Engineering and Construction projects and the timing of progress on projects in Fabrication Services group have dragged down revenues for the Zacks Rank #5 (Strong Sell) company. Escalating operating expenses and interest expense have also been hurting profits in recent times.
The analyst community has also been distinctly bearish on the stock in recent times. Chicago Bridge & Iron’s earnings estimates have moved south sharply in the past 60 days, with the Zacks Consensus Estimate for 2017 plunging from earnings of $3.39 to a loss of $1.71, on the back of four downward estimate revisions versus none upward.
Stocks to Consider
Some better-ranked stocks in the industry are EMCOR Group, Inc. EME, MasTec, Inc. MTZ and Sterling Construction Company Inc STRL. While MasTec and Sterling Construction sport Zacks Rank #1 (Strong Buy), EMCOR carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
EMCOR came up with an average positive earnings surprise of 11.7% for the last four quarters, having beaten estimates thrice over the last four quarters.
MasTec has an excellent earnings beat history, having surpassed estimates each time over the trailing four quarters. It has an average positive earnings surprise of 29.7%.
Sterling Construction came up with an average positive earnings surprise of 47.0% for the last four quarters, having beaten estimates twice over the last four quarters.
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