Yahoo Finance Fluor JV Wins $263M NCDOT Contract for Vital I-26 Expansion
The joint venture (JV) between Fluor Corporation FLR and United Infrastructure Group has been selected by the N.C. Department of Transportation (“NCDOT”) for the Vital I-26 Expansion project near Asheville, NC. Fluor will book the $263-million contract in third-quarter 2019.
The Interstate Expansion project, whose construction is scheduled to be started in the fall of 2019, will expand the interstate from four lanes to eight, four in each direction, doubling the interstate's capacity. The construction is expected to take five years.
The project will incorporate widening I-26 from two to four lanes and the construction of seven new bridges. Other project highlights include multiple retaining walls, upgrading all drainage systems, new concrete pavement and other safety improvements.
What’s Working in Favor of Fluor?
Growing demand for infrastructure development has been benefiting Fluor of late. Revenues from its Mining, Industrial, Infrastructure & Power segment, which accounted for 36.8% of total second-quarter 2019 revenues, increased 12.9% on a year-over-year basis. The segment booked new awards worth $510 million in the quarter.
Backlog at the end of the quarter amounted to $13.5 billion compared with $12.4 billion a year ago. Notably, the company projects revenues to grow 30-40% in second-half 2019.
Markedly, a glimpse of Fluor’s price performance reveals that the stock has declined considerably post second-quarter results, as earnings missed the Zacks Consensus Estimate by 36.5% and deteriorated significantly from the year-ago period. Revenues also missed the consensus mark by 10.2% and declined 16.2% on a year-over-year basis. The downside was mainly caused by lower contributions from Energy & Chemicals, Government, and Diversified Services segments. Fluor has been facing reduced level of project execution activity across the business, barring the Mining, Industrial, Infrastructure & Power segment.
Notably, the company withdrew all its previously issued guidance for the year due to the ongoing strategic review of business and operations. That said, strong end-market prospects, solid backlog level and a good business portfolio mix will drive growth.
Zacks Rank & Key Picks
Currently, Fluor carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the broader Construction space include MasTec, Inc. MTZ, Construction Partners, Inc. ROAD and TopBuild Corp. BLD. While MasTec sports a Zacks Rank #1 (Strong Buy), Construction Partners and TopBuild carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings for MasTec are expected to increase 32.4% in 2019.
Construction Partners has a three-five year expected EPS growth rate of 10%.
TopBuild’s 2019 earnings are projected to grow 24.6%.
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