Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Foster Wheeler Moving On

Foster Wheeler (Nasdaq: FWLT  ) might be more difficult to analyze than most stocks. That's less because of the business -- though highly cyclical engineering and construction firms like this can be tricky to value -- and more because of the company's recent near-death experience. It appears that Foster Wheeler has passed its recovery stage, and has now begun to exploit the hot market for large-scale building projects.

Like most other builders, Foster Wheeler offered a solid quarter. Revenue rose about 42%, margins expanded (though gross margins were lower), and EBITDA grew about 37% from last year, net of some one-time items. New award growth was also quite strong, and the backlog continues to grow.

The story at Foster Wheeler won't look too different from those of other companies like Fluor (NYSE: FLR  ) , Shaw Group (NYSE: SGR  ) , and Washington Group (Nasdaq: WGII  ) . The company's enjoying very strong near-term demand from petrochemical companies such as ExxonMobil (NYSE: XOM  ) and Chevron (NYSE: CVX  ) , and there's a widespread assumption that demand for new power generation will more than pick up the slack when petrochemical demand starts to soften in a few years' time.

Perhaps akin to Chicago Bridge & Iron (NYSE: CBI  ) , Foster Wheeler is a more focused play on these trends. The company gets nearly all of its business from the oil/gas/petrochemical and power-generation sectors, doing relatively little in environmental, industrial, or infrastructure projects. There's nothing necessarily wrong with that, but it's a little nugget that prospective investors may want to keep in mind.

Foster Wheeler doesn't really stand out as a compelling bargain to me today. I certainly wouldn't argue against the notion that it might see better or stronger-than-average earnings leverage in the next few years, since it's so focused on the energy/chemical markets. But that would give the company a higher risk rating as well.

For more constructive Foolishness:

Build a powerful portfolio on a solid foundation of sound financial advice from our Foolish newsletters. You can try any of our premium investing services free for 30 days.

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 515344, ~/Articles/ArticleHandler.aspx, 10/23/2016 4:48:04 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
FWLT.DL $0.00 Down +0.00 +0.00%
Foster Wheeler CAPS Rating: ****
CBI $27.62 Down -0.14 -0.50%
Chicago Bridge and… CAPS Rating: ****
CVX $101.30 Down -0.57 -0.56%
Chevron CAPS Rating: ****
FLR $49.52 Up +0.17 +0.34%
Fluor CAPS Rating: ****
SGR $32.57 Down +0.00 +0.00%
The Shaw Group CAPS Rating: ***
XOM $86.62 Down -0.59 -0.68%
ExxonMobil CAPS Rating: ****