Fluor Corp (FLR, Financial) experienced a significant decline in its stock price, falling by 13.58% to $50.93. This drop came after the company released disappointing quarterly earnings, setting a stark contrast against the broader market's modest uptick.
For the third quarter, Fluor reported revenue of $4.09 billion, a slight increase from $3.96 billion in the same period last year. The urban solutions segment, which remains the largest, saw a 35% surge to $1.93 billion. However, the energy solutions segment declined by 8% to $1.43 billion. These numbers fell short of analyst expectations, which projected revenues exceeding $4.7 billion.
Net income for Fluor declined to $89 million, or $0.51 per share, compared to $177 million a year earlier. This result missed analyst expectations, which anticipated earnings of $0.77 per share. The decline in net income was attributed to project delays and cancellations.
Further adding to investor concerns, Fluor adjusted its full-year 2024 net income guidance to between $2.55 and $2.75 per share, down from the previous estimate of $2.50 to $3.00. This revised guidance remains below the average analyst forecast of $2.88 per share.
On the valuation front, Fluor's current price is significantly above its GF Value estimate of $31.68, indicating that the stock is "Significantly Overvalued". The company's price-to-earnings ratio stands at 22.34, which is relatively high, suggesting a potential premium in its valuation. Additionally, the price-to-book ratio is near a 10-year high at 4.07, underlining concerns about overvaluation.
Despite these valuation concerns, Fluor demonstrates strong financial metrics, with a high Piotroski F-Score of 7 and a strong Altman Z-Score of 4.58, indicative of its solid financial health. However, the company's return on invested capital (ROIC) is below its weighted average cost of capital (WACC), signaling potential inefficiencies in capital usage.
Investors should also take note of recent insider activity, with four insider selling transactions totaling 75,521 shares in the past three months and no insider purchases recorded. This activity may reflect the internal sentiment regarding the company's near-term prospects.
Overall, while Fluor (FLR, Financial) showcases robust segments and maintains strong financial health, its current valuation levels and lowered guidance necessitate cautious consideration from potential investors.
