Please ensure Javascript is enabled for purposes of website accessibility

Why Fluor Stock Is Stumbling Today

By Matthew DiLallo - Feb 26, 2021 at 12:08PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The engineering and construction services company disappointed its investors.

What happened

Shares of Fluor (FLR 3.27%) tumbled more than 12% by 11:15 a.m. EST on Friday. Weighing on the engineering and construction services company was its disappointing fourth-quarter results and a weak outlook for 2021. 

So what

Last year was another challenging one for Fluor due to the impact the COVID-19 outbreak had on the global economy. The company reported a loss of $115 million, or $0.92 per share, during the fourth quarter. That pushed its full-year loss to $293 million, or $2.09 per share. While that was an improvement from 2019's $1.5 billion or $10.89-per-share loss, it missed the analysts' consensus estimate by $0.59 per share. The main issues were the impact of weak commodity prices and the COVID-19 outbreak on its businesses, which led it to record $358 million of non-cash impairment charges. 

A bright red arrow heading downward.

Image source: Getty Images.

While Fluor expects 2021 to be a better year as the pandemic-related headwinds fade, it will be a "bridge year" for the company, according to CEO David Constable. Because of that, the company only expects its adjusted earnings to range between $0.50 to $0.80 per share, well below the analysts' consensus that it would earn $1.10 per share. Longer-term, the company anticipates that its earnings will grow to between $3 and $3.50 per share by 2024. Fueling that forecast is a shift in its strategy to generate 70% of its sales from non-traditional energy like low-carbon oil and gas and hydrogen.  

Now what

Fluor is working to transition its company to create value for shareholders. It's exiting businesses that didn't make money while refocusing its efforts on the energy transition to low-carbon sources. While that strategy makes sense, Fluor has had problems executing in the past. Because of that, investors should keep a close eye on its ability to deliver on this game plan so that it doesn't repeat its past mistakes.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Fluor Corporation Stock Quote
Fluor Corporation
$26.81 (3.27%) $0.85

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/20/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.