Veteran engineering and industrial conglomerate Fluor (FLR +4.88%) couldn't engineer good news for its shareholders on Friday. That morning the company unveiled its latest set of quarterly figures, and the market just didn't like the looks of them. Fluor's share price fell by nearly 14%, on a day when the benchmark S&P 500 index was in the black with a 0.3% increase.
Disappointing third-quarter fundamentals
Fluor divulged that its third-quarter revenue amounted to $4.09 billion, a number not greatly higher than the $3.96 billion it earned in the same period of 2023. Of its four business lines, the current largest one -- urban solutions -- saw a 35% increase in its take (to $1.93 billion), while No. 2 (energy solutions) declined by 8% for a contribution of $1.43 billion.
Yet analysts tracking the stock were expecting a better showing. Collectively, they were modeling quarterly revenue of over $4.7 billion for Fluor.
The gap between performance and pundit expectations was wider on the bottom line. Fluor's net income fell steeply, declining to $89 million ($0.51 per share) for the quarter, against the year-ago period's $177 million. The consensus analyst estimate was $0.77 per share.
Management attributed the bottom-line slide partly to project delays and cancellations. However, the company quoted CEO David Constable as saying that this "does not change our focus on pursuing demand-driven growth opportunities in the markets we serve and on returning cash to shareholders."
NYSE: FLR
Key Data Points
Earnings guidance narrowed
In its earnings release, Fluor tightened its full-year 2024 guidance for adjusted net income. It now believes this figure will land at $2.55 to $2.75 per share, where previously it was forecasting $2.50 to $3.00. The upper end of the new range sits notably below the average analyst estimate of $2.88 per share.
Fluor's uninspiring top-line growth and significant net income decline are certainly cause for concern. The company will have to prove to investors that it can improve that performance, and do so fairly quickly. As yet, there's little indication that it's ready for a fast turnaround, so perhaps it's best to avoid the stock for now.
