Boosted by new life-sciences contracts worth over $1 billion and Wall Street forecasts of 694% earnings growth in Q3, engineering, procurement and construction (EPC) powerhouse Fluor has grabbed the attention of top money managers. In addition to sporting a near-perfect 98 Composite Rating, 74 mutual funds with an A+ rating from IBD own shares in FLR stock.
Market history shows that the best stocks often hail from the top industry groups. In sync with that fact, Fluor shares top billing with Sterling Infrastructure in the Building-Heavy Construction group, which ranks an impressive No. 20 out of the 197 industries IBD tracks.
Fellow EPC firm Sterling has already blasted to an all-time high, while FLR stock continues to engineer a breakout of its own. Fluor has landed on the IBD Breakout Stocks Index as it crafts a new cup with handle.
Other highly rated peers include Primoris Services, Quanta Services and Wildan.
See Who Joins Fluor On The IBD Breakout Stocks Index
Global Footprint And EPC Expertise
Based in Irving, Texas, Fluor applies its EPC expertise to address complex challenges across a wide range of industries around the world. The company generated $13.7 billion in revenue last year, earning a spot on the Fortune 500. The company has been providing EPC services for more than 110 years.
Fluor operates across three core segments: Energy Solutions, Urban Solutions and Mission Solutions.
The Energy Solutions segment involves fuels, chemicals, liquefied natural gas (LNG) and nuclear power services.
Urban Solutions addresses the need for reliable infrastructure, advanced technologies and life-sciences innovations, as well as the procuring of resources through responsible mining practices and sophisticated manufacturing.
Last month, Flour was awarded over $1 billion in life sciences contracts. The agreements involve $487 million in a biotech expansion project in Denmark. A separate contract mobilizes resources in the central U.S. for the first phase of a new life-sciences production facility valued at $574 million. Fluor will recognize these reimbursable contracts in the second-quarter backlog.
Through its Mission Solutions business, Fluor works with government agencies and the intelligence community to accomplish a wide variety of critical missions. These organizations rely on Fluor's EPC expertise to handle a range of responsibilities, from delivering base life support to tens of thousands of soldiers to performing decontamination, decommissioning and environmental remediation.
Fluor Engineers Explosive Growth
On Aug. 4, Fluor posted Q2 revenue of $3.94 billion, a 19% year-over-year gain. That marked a second quarter of double-digit sales growth.
Earnings spiked 407% to 76 cents a share. That followed a 155% EPS surge in the first quarter. For Q3, Wall Street forecasts a whopping 694% increase, with expectations of 148% earnings growth for the full year.
At the time of its Q2 report, Fluor raised its earnings-per-share guidance for 2023 to the $2-$2.30 range.
The EPC firm forecasts revenue growth in the 10%-15% range for the year.
FLR Stock Eyes Breakout After Huge Gap-Up On Earnings
Fluor catapulted nearly 16% in a single day after its Q2 report, propelling FLR stock back above its 200-day moving average. In a clear sign of demand, volume spiked 409% higher than normal.
The 21-day exponentional moving average has now shot above that 200-day benchmark, while the 50-day line moves toward doing the same.
After the post-earnings jump, the EPC stock has pulled back in lightening volume to form a handle. The potential new buy point is 37.20.
Note that the new chart pattern is a first-stage base since Fluor undercut the low in its prior pattern to reset its base count before forming the new entry. Such first-stage patterns have a higher likelihood of success than later-stage consolidations.
Selling pressure in the market indexes has pulled the Nasdaq and S&P 500 below their 50-day moving averages. Wednesday's action also dragged on Fluor, but downside volume was below average and the handle remains intact.
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Follow Matthew Galgani on Twitter at @IBD_MGalgani.
