Fluor Corp Wins Contract - Analyst Blog

Fluor Corporation (FLR) has won a contract for providing consultancy work on Abu Dhabi’s new Integrated Public Transportation Network.
 
A mass-transit system is being constructed to accommodate anticipated growth over the coming decades in support of Plan Abu Dhabi 2030. Fluor will provide consulting services to the Abu Dhabi Department of Transportation on modeling and system integration, engineering, procurement and commissioning, commercial upliftment and analysis of financing pattern.
 
Fluor stands out as one of the few engineering and construction companies that has the technological expertise, logistics, procurement capabilities and project management experience needed to execute on a large variety of projects, including large complex projects for a diverse group of industrial and government clients virtually anywhere in the world.
 
Given its strong financial position, Fluor will have ample financial resources to pursue a niche acquisition program aimed at strengthening its considerable service breadth. The company is delivering solid results driven by its diversified business model and targeted new awards strategy.
 
Fluor is one of the best-in-class E&C companies with a favorable contract mix, diverse service offerings and strong relationships around the world; allowing it to sustain operating margin going forward relative to its peers without diminishing growth potential. We believe project wins in the next few quarters will be fraught with intense competition, raising concerns on potential margins on new awards.
 
Given the breadth of Fluor's experience from solid fuel to gas fired to nuclear and renewable solutions, we feel that it is extremely well positioned to capture significant market share as demand returns.
 
The current economic downturn will likely affect a portion of its client base, as well as subcontractors and suppliers, and could materially affect its backlog and profits. Backlog is subject to unexpected adjustments and cancellations and therefore, may not be a reliable indicator of future earnings.
 
Fluor is a holding company that owns the stock of a number of subsidiaries. It is a group of one of the largest professional services firms, providing engineering, procurement, construction and maintenance as well as project management services on a global basis.
 
Fluor serves a diverse set of industries worldwide including oil and gas, chemical and petrochemicals, transportation, mining and metals, power, life sciences and manufacturing. It is also a primary service provider to the U.S. federal government. It performs operations and maintenance activities for major industrial clients. In some cases, it operates and maintains their equipment fleet.
 
We currently have a Neutral recommendation on Fluor Corporation.