Fluor's stock is no stranger to wild swings. In May, after a nightmare of a first-quarter earnings report, shares got a 30.2% haircut. Then in June, they whipsawed upward again by 21.5%. But August's drop was by far the biggest monthly decline, in percentage terms, in the last decade. In sum, the stock has lost 72.5% of its value over the last five years.
You'd think it would be hard for Fluor to outdo (underdo?) its dismal Q1 earnings report. Not only did the company miss analysts' consensus expectations on revenue and earnings by wide margins, it reported a net loss of $0.14 per share, slashed its EPS guidance from the $2.50 to $3.00 range to a $1.50 to $2.00 range, and also announced its CEO had stepped down.
Yet even in that context, the second-quarter report looked really, really bad. Revenue missed expectations by some $600 million. A strategic review process led the company to report pretax charges of $714 million, resulting in a net loss of $3.96 per share. It also withdrew its already-lowered 2019 guidance, and refused to issue new guidance, citing potential additional impacts to future quarters due to the ongoing review process.
About the only good thing the company can say is that at least it didn't lose its CEO this time around: Interim CEO Carlos Hernandez was confirmed by the board to the permanent position in May.
When a company that has already slashed its guidance withdraws that new guidance, and can't (or won't) provide an update because of how much worse things might get, you should expect that it's going to be brutal. Fluor has had ongoing issues with bidding too aggressively on projects and incurring charges related to its gas power plants, and those are just the issues we know about. Who knows what else this strategic review might turn up?
Smart investors will want to stay far, far away from this train wreck. There are plenty of more compelling investments to consider.